PERFORMANCE COMPARISON
FIFTH THIRD BANCORP
ANNUAL REPORT | 1
PERFORMANCE COMPARISON
FIFTH THIRD BANCORP
ANNUAL REPORT | 2
From our Chairman,
CEO and President
Dear Shareholders,
At Fifth Third, we believe great banks
distinguish themselves not by how they
perform in benign environments, but rather
by how they navigate uncertain ones. Our
operating priorities are stability,
profitability and growth—in that order. We
achieve them by obsessing over the details
in our day-to-day operations while
simultaneously investing for the long term.
Throughout 2024, the industry outlook for interest
rates, loan growth, regulation and capital markets
activity all changed significantly. Despite the
uncertain environment, I am proud to report Fifth
Third continued to deliver strong results for our
shareholders. Our adjusted full-year return on assets,
return on equity and efficiency ratio all finished
among the top in our peer group. Loans ended the
year up 2% on an end-of-period basis as activity
accelerated through year-end. Based on the FDIC’s
annual summary of deposits, we finished #1 among all
large banks in retail branch deposit growth (on a
capped basis) for the second consecutive year.
As important, our results were predictable and
inflected ahead of our peers. We were one of only
two banks in our peer group to achieve the full-year
guidance we provided in January for net interest
income (NII), fees, expenses, pre-provision net
revenue and net charge-offs. Our net interest margin
inflected in the first quarter, as we said it would. NII
inflected in the second quarter, as we said it would,
and positive operating leverage returned in the
fourth quarter on both a sequential and a year-over-
year basis, again, as we said it would.
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ANNUAL REPORT | 1
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Our operating priorities
are stability, profitability
and growth—in that order.
We achieve them by
obsessing over the details
in our day-to-day
operations while
simultaneously investing
for the long term.
Strong profitability and disciplined balance sheet
management allowed us to resume share repurchases
in the second quarter and to raise our dividend for
the ninth consecutive year. We returned over $1.6
billion of capital to shareholders during 2024 while
also increasing our CET1 ratio nearly 30 basis points
to 10.6%.
Between share price appreciation and dividends, we
generated a total shareholder return of 26% for 2024.
More notably, for long-term investors, we finished #1,
#1 and #2 in five-year, seven-year and 10-year total
shareholder return among our peers that did not
participate in an FDIC-assisted transaction.
Strategically, we continued to invest in growing our
Southeast presence, in differentiating our product
offerings through innovation and excellent service,
and in modernizing our operating platforms. In the
Southeast, we grew consumer households by 6% and
retail deposits by 16%. During the year, we added 31
new branch locations and increased our commercial
banking relationship manager headcount by 25% in
the Southeast and other expansion markets. We also
were named #1 for Retail Banking Customer
Satisfaction in Florida by J.D. Power as part of its
2024 U.S. Retail Banking Satisfaction Study℠. This is
a significant achievement given both our significant
presence in Florida and the fact that 17 of the 20
largest U.S. banks maintain a branch presence in
the state.
FIFTH THIRD BANCORP
ANNUAL REPORT | 2
$1.6B
We returned over $1.6 billion
to shareholders during 2024
while also increasing our
CET1 ratio nearly 30 basis
points to 10.6%.
FITB
Peer Median
Top Quartile
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
0%
50%
100%
150%
200%
Annual Total Shareholder Returns Cumulatively Outpace Peers
191%
147%
105%
20
24
In commercial payments, we processed more than
$17 trillion in volume during the year. Our software-
enabled managed services products and Newline™,
our embedded payments platform, led the way on
growth. Tearsheet, Global Finance and This Week in
FinTech all recognized Fifth Third with awards for
payments product innovation. In Wealth & Asset
Management, total assets under management grew
17% for the year, and, for the sixth consecutive year,
we were recognized as a Best Private Bank by
Global Finance.
We also continued to make strong progress on
modernizing our operating platforms. In 2024, we
completed general ledger and clearing platform
conversions and launched time deposits on a new
modern core. Our value streams, inspired by lean
manufacturing techniques, reached $150 million in
annualized savings, with total company headcount
declining 1% year over year. These initiatives continue
to reduce manual work, improve execution quality
and provide funding to invest in growth strategies.
Talent and culture remain a strength for Fifth Third.
Despite competition for talent, Fifth Third employee
attrition is at a 15-year low and in the top quartile for
talent retention among all banks. I attribute this
performance to the strength of our relational culture,
our focus on internal development, a shared sense
that we are winning, and the fact that we are deeply
invested in the communities where we operate. In
2024, our employees volunteered over 110,000 hours
and served on over 1,200 boards.
The investor and author James Grant wrote that
progress is cumulative in science and engineering,
but cyclical in finance. As we begin 2025, there are
many reasons to feel optimistic for the U.S. banking
industry. Banks should benefit from a more favorable
regulatory environment than we have had for some
time. We hope to have certainty around capital and
liquidity reform, improvements to the stress-testing
program, and a slowdown in new rulemaking.
If the current interest rate environment holds—with
rates meaningfully above zero and some steepness
between the two- and 10-year points in the curve—
banks with low-cost retail deposits and diverse loan
origination platforms should be positioned to deliver
strong returns. We have not seen an environment like
this since 1994-1995. If improving business sentiment
and clarity on tax policy lead to increased business
investment, we could also see a return to GDP+ loan
growth across the industry for the first time in
several years.
With that said, the global economy is a complex,
adaptive system. Complex systems react to change
in unexpected ways, and we are seeing a lot of
change being introduced in a brief period of time.
Our posture is hopeful but also prepared. In this
environment, I thought it might be useful to share
some of the foundational beliefs that inform our
operating priorities and investment strategies.
Delivering consistency and
predictability in the face of
uncertainty
When we talk to investors, the questions we get most
frequently are variations on the themes of “what is
your outlook for the economy” and “how much
higher can you move your profitability targets if
FIFTH THIRD BANCORP
ANNUAL REPORT | 3
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$10
$15
$17
2019
2023
2024
Payments Processed
($ in Trillions)
11%
5-year
CAGR
conditions remain favorable.” I understand the logic
of these queries; however, I believe there are more
important questions.
We believe the world is more stochastic than
deterministic; that events do not unfold in a
predetermined or inevitable way so much as with
elements of probability and randomness. This is a
particularly crucial distinction in the banking business
—which is sensitive to macroeconomic factors, reliant
on leverage for profitability, and funded by other
people’s money. Said plainly: If the goal is to produce
the best return for long-term investors, we believe it
is more important to produce consistent results
under a broad range of scenarios (and to avoid the
potholes) than it is to generate the best results when
things line up perfectly.
It's easy to say “consistency and predictability are
important;” delivering both is much harder. Our
strategy has been to engineer the business mix so that
it is more naturally resilient, to run the balance sheet
defensively, and to embed optionality in how we
execute so we can react quickly as conditions change.
On business mix, we direct investments and allocate
capital to produce a target balance sheet
composition and revenue mix, as opposed to
allowing our business to grow unconstrained and
purely based on market demand at a given time. This
approach allows us to stay diversified and gives us
flexibility to adapt as the environment changes,
which is important given that we cannot predict
where the next stress will emerge. We target a 60/40
balance between commercial and consumer, with
commercial contributing 60% of loans and consumer
contributing 60% of deposits. We also target a lower
allocation to historically volatile asset classes, more
granularity in our loan portfolio and deposit base, and
a focus on fee income.
Balance sheet management requires discipline and
our diversified loan origination platforms provide
optionality. Many banks now rely on residential
mortgages, commercial real estate (CRE) and
commercial and industrial (C&I) lending to contribute
more than 95% of their loan portfolio. Our through-
the-cycle commitments to the auto business and
equipment leasing, and our Provide and Dividend
Finance fintech platforms, give Fifth Third more
levers to pull than others as we manage our balance
sheet and interest rate risk position.
We believe credit concentration limits boost both
resiliency and quality. Our investor-owned CRE
portfolio is an example. We can be more selective
because we are not reliant on CRE for growth, which
is one major reason we have experienced zero net
charge-offs in CRE over the past three years.
Similarly, we have deliberately managed our
exposure to rapidly growing, non-bank financial
institution lending categories, which have not yet
experienced a credit cycle. We currently maintain
one of the lowest allocations among peers based on
the fourth quarter 2024 FDIC call reports.
On fee income, we diversify across sources, embed
countercyclicality and favor recurring versus
transactional revenues. Five different fee categories
each contributed more than 10% of total fee income
this past year, and the largest was only 23%. Wealth
& Asset Management and commercial payments are
our two largest fee revenue contributors, and both
are based on recurring revenue. The commercial
payments business offers embedded countercyclical
benefits—volumes may fall during a recession, but so
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We believe it is more
important to produce
consistent results
under a broad range of
scenarios (and to avoid
the potholes) than it is
to generate the best
results when things line
up perfectly.
do earnings credits as the Fed cuts rates. Despite a
few difficult years in the mortgage business, we
remain committed. As the sixth-largest bank-owned
mortgage servicer, we have a scaled platform, and
the business provides countercyclical revenue
benefits from refinance activity again in the future.
Last, we manage our business day to day in a fashion
that maximizes optionality. We avoid building plans
that rely on perfect market conditions to be
achievable. We define multiple paths to achieving our
revenue targets, as we did last year when we were
able to manage deposit margins once it was clear
industry loan growth did not materialize. We always
plan to keep a tight lid on expenses because it is
easier to invest more in a stronger environment than
it is to cut in a weaker environment.
None of these concepts are complicated; it is
simply hard to maintain the discipline to employ
them consistently. That is what makes
differentiation possible.
Achieving sustained
differentiation and defensibility in
growth strategies
In last year’s letter, I shared our belief that
competitive barriers are exceedingly difficult to
achieve in the banking business. We strive to grow
organically at a rate that is a few percentage points
higher than nominal GDP, which means we need to
take market share to achieve our goals. Investment in
our strategies has been consistent for several years
now and has contributed to our strong results. We
expect to continue to see others attempt to replicate
our success through investment in similar areas. The
U.S. banking sector is dynamic and highly
competitive; success gets noticed quickly. It is then
reasonable to ask whether we can sustain our
advantage if others copy our strategies. I do believe
we can stay differentiated, based less on what we
have done and more on how we have done it.
Take our focus on expanding our branch network in
the Southeast. Since 2018, Fifth Third has built 138
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STABILITY
10.6%
CET1 Capital Ratio
+30 bps vs. 2023
73%
Loan-to-Core Deposit Ratio
+12 bps
Increase in Net Interest Margin*
4Q24 vs. 4Q23
PROFITABILITY
59.2%
Efficiency Ratio*
Improved 40 bps vs. 2023
1.09%
Return on Average Assets
12.47%
Return on Average Common
Equity
GROWTH
31
New Branches in the Southeast
6%
Household Growth in the
Southeast vs. 2023
25%
Increase in Middle Market
Relationship Managers in high
growth areas vs. 2023
*Non-GAAP financial measure, see the Non-GAAP financial
measures section of the MD&A.
BANCORP
OPERATING
RESULTS
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branches in the Southeast, only 15 fewer than the
total builds by all our peers combined. It is easy to
see why others are attracted to building in the
Southeast—20 of the 30 fastest-growing metro areas
in the country are located there, and our expansion
has produced the fastest retail deposit growth (on a
capped basis) among all large banks.
At this stage, our primary advantages in the
Southeast are wisdom through experience and
existing scale. We haven’t built 138 branches; we
have built one branch 138 times. It took time to build
and refine the proprietary geospatial model we use
to identify where to invest in each metro area. We
researched and designed our NextGen branch
format. We had to learn when and how to staff de
novo branches, and how to support them with the
best marketing tactics after opening. Our team got a
lot right early on, but, as with any new effort, the only
way to learn is by doing.
The value of this experience is measurable. Based on
2024 FDIC data, Fifth Third’s average de novo
deposits per branch are more than 30% higher than
peers five years after opening. Our advantage should
continue to compound with the addition of our next
200 branches to be built through 2028, of which
FIFTH THIRD BANCORP
ANNUAL REPORT | 6
Fifth Third
Peer Avg
0
10
20
30
40
50
60
YR 1
YR 2
YR 3
YR 4
YR 5
20
24
10
45
12
9
62
Average De Novo Deposits Per Branch by Vintage1
$ in millions
1 Filtered for de novos and based on 2024 FDIC data.
Not all de novos have been open for 5 years
+30%
VS. PEERS
Since 2018, Fifth Third
has built 138 branches
in the Southeast.
138
nearly three-quarters of these locations are secured.
When we are done, we will have nearly 600 branches
across 32 high-growth metro areas in the Southeast.
In most of these metros, it will be prohibitive for any
other regional bank to build organically to a top-five
location share.
Another area where we
are seeing increased
competitive attention is in
commercial payments.
This is not surprising,
given the size of the
market and the desire for
fee income and operating
deposits. Our business is
large and long-tenured,
with a top-five market
share in many product
categories. We generated
over $2 billion in revenue
between NII and fees last
year and have grown
payments processing
volumes at an 11%
compound annual rate
over the past five years. In
2024, Fifth Third originated nearly 400 million ACH
disbursements. This volume is equal to over 90% of
the total ACH disbursement volume originated by
all other Category IV banks combined.
Our commercial payments strategy has been three-
fold. First, keep pace with market growth by
maximizing wallet share with lending clients. Over
80% of our C&I lending clients also maintain a
payments relationship with Fifth Third, one of the
highest wallet share rates among regional peers.
Second, outgrow the bank market by adding
payments-only clients through our managed services.
And third, grow with fintechs and other technology
companies by providing embedded payments
platform infrastructure and risk management
capabilities through NewlineTM. Managed services are
software-enabled payments solutions that create
operational efficiencies for our customers, which is
equivalent of corporate treasury business process
consulting. We built or bought the software
engineering resources to automate workflows in key
industry verticals and integrated directly into the
largest ERP software platforms that clients in those
industries use to run their businesses. We trained our
sales force to solve payments-related challenges,
instead of competing on price. We are elevating our
customer support capabilities given the increasing
sophistication of our product offerings. Similar to our
branch expansion plans, this strategy benefits from
years of planning and refining as we learn by doing.
Embedded payments is a compliance- and
technology-heavy business requiring very specific
skill sets. Our expertise to externalize these
capabilities dates back to the 2009 spin-off of Fifth
Third’s card processing business (then Vantiv, now
Worldpay), and the need it created to support a
third-party payments processor on our rails in a
compliant and scalable fashion. We added a modern
technology layer through our acquisition of Rize
Money in 2023. Today, we have hundreds of the
leading fintech and software companies as clients,
including AngelList, Blackbaud, Brex, Nuvei, Stripe
and Trustly. We grow “by breathing”—as these clients
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continue to take market share from banks, Fifth Third
wins. Their power law is our power law.
One of the key differentiators of our regional banking
model—client coverage for business banking, middle
market banking, wealth management and local treasury
management all report in to a local regional president
in 14 different regions—is that we are uniquely
positioned to help our clients understand the local
economic landscape and deliver “One Bank” solutions.
We’re embedded in these communities and committed
to their future, and we’re well-positioned to identify
opportunities for sustainable, long-term growth.
One example of this is our wealth business, a focus
for nearly every bank with which we compete.
Fiduciary wealth management is in Fifth Third’s DNA
—the word “trust” was in our name until 1969. Today,
we have $69 billion in assets under management and
$587 billion in assets under custody. Our strategy in
wealth management is relationship-based: More than
75% of new Private Bank assets come from referrals
made by our Commercial and Retail Banking business
lines. Part of our success in wealth is attributed to our
Private Bank’s Business Transition Advisory Team,
which is dedicated to preparing clients for their
business transition and succession planning. Our
advantage, relative to a wirehouse brokerage or a
standalone bank-owned wealth business, is
incumbency—clients have already chosen Fifth Third,
and that relationship provides both access and insight.
Artificial intelligence and the
potential impact on our business
2024 was a year when many artificial intelligence
capabilities evolved from wow-generating proofs-of-
concept to market-ready (or near market-ready)
technologies. No letter recapping 2024 and looking
forward to 2025 would be complete without a
discussion of how they will impact our business.
As I have said previously, I believe the old industrial
logic on the benefits to scale in technology may not
apply in the same way in a world where most
companies rent cloud computing from the same
providers, pay by the API call for the same software
platforms, and pay by the prompt for the same large
language models. Some would argue that they have
never applied to the banking business, where
technology budgets as a percentage of revenue are
remarkably stable across banks of different sizes and
where total revenues and total employee headcount
are highly correlated.
Instead, I’m fond of the adage that new technologies
trigger a race between challengers and incumbents,
and that to win, incumbents must innovate before
disruptors get distribution. Said differently, new
technologies make it more important to be quick
than to be big, and more important to have the right
technologists, product owners and partners than to
have the largest legacy technology budget. When a
capability overhang exists, it is time to build.
We have organized our AI efforts in five areas: AI-
enabling platforms and risk management, AI for the
employee, AI for the engineer, AI for the process and
AI for the customer. Ahead of enabling any use-
cases, we spent a year building our AI model risk
management framework, inclusive of policies,
governance and processes. We are building AI
platforms in our cloud tenant where they are
connected to all of our enterprise engineering
services so we can deploy and scale AI into our
business when ready.
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At Fifth Third, we have
organized our AI efforts in five
areas: AI-enabling platforms
and risk management, AI for
the employee, AI for the
engineer, AI for the process
and AI for the customer.
AI tools embedded in our productivity suite (e.g.,
email, word processing, etc.) are available to all
employees after prompt engineering and related
training. We are boosting adoption by embedding
“mavens” in each business unit and functional area.
All of Fifth Third’s code base is now on GitHub and
we are scaling GitHub Copilot access to all
engineering teams. Currently, the prompt acceptance
rate—or the percentage of AI-developed code that is
accepted by the engineer—is over 20%, a significant
boost to productivity.
On AI for the process, we are working on more than
two dozen different use cases; an example is
automating data extraction. On AI for the customer,
we continue to get great benefits from Jeanie®, our
AI chatbot. Jeanie® ranked #1 of 18,000 chatbots in
classification accuracy based on third-party partner
research and is able to handle more than 150
different intents. We are optimistic about a future
where we will be able to use AI to build products that
manage your financial jobs for you as opposed to
providing tools you use to do the job yourself.
We recently celebrated our “Percentennial,” which
marks the 166.7-year anniversary (or our Fifth Third
birthday) of our 1858 founding and our unique brand
name. As a testament to how far we’ve come, the
trophy shelf at our Cincinnati headquarters has been
expanded to accommodate our growing list of
accolades. In the last year, Euromoney named Fifth
Third U.S. Best Super-Regional Bank and Ethisphere
again named Fifth Third one of the World’s Most
Ethical Companies®. Fifth Third was one of only four
banks worldwide, and one of two in the U.S., to make
that list.
On behalf of our team members at Fifth Third, thank
you for your continued belief in our company. We will
never lose sight of the fact that, as our shareholders,
this is your bank, and we owe it to you to get 1% better
every day. You have our commitment that we will.
Tim Spence
Chairman, CEO and President
We will never lose sight of the
fact that, as our shareholders, this
is your bank, and we owe it to
you to get 1% better every day.
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FIFTH THIRD BANCORP
ANNUAL REPORT | 10
A YEAR IN REVIEW
CVG Airport bank branch grand opening
In March 2024, Fifth Third opened a financial center in Concourse B at Cincinnati/Northern Kentucky
International Airport (CVG).
Our epic group photos
Ohio colleagues located at our downtown Cincinnati headquarters and our Madisonville campus gathered for special
group photographs.
Expanding financial access
Fifth Third opened its doors to the community in
Charlotte’s Historic West End neighborhood with a soft
opening of a de novo branch in Dec. 2024.
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FIFTH THIRD BANCORP
ANNUAL REPORT | 11
American Banker “Most Powerful Women In Banking”TM Gala
Fifth Third colleagues attended American Banker’s “Most Powerful
Women In Banking” Gala in New York to celebrate the recognition of
Bridgit Chayt and Melissa Stevens.
Fifth Third Day
Colleagues packed food donations on this
annual day of giving that occurs on May 3 (5/3).
Modernizing our workspaces
2024 marked the official kick-off of a multi-year renovation project at our Madisonville Operations Center in Cincinnati that
will foster a more collaborative, engaging workspace.
Making an impact in our communities
Standing beside our Financial Empowerment Mobile (eBus), members
of Fifth Third presented a check to Grand Valley State University for
REP4® FinLit, a student-designed tool focused on financial education.
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FIFTH THIRD BANCORP
ANNUAL REPORT | 12
#1 in Florida for Retail Banking
Customer Satisfaction
Fortune, ©2024 Fortune Media IP Limited. All rights reserved. Used under license.
20
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AWARDS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
Commission File Number 001-33653
Fifth Third Bancorp
(Exact name of Registrant specified in its charter)
Ohio
31-0854434
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification Number)
38 Fountain Square Plaza
Cincinnati, Ohio 45263
(Address of principal executive offices)
Registrant's telephone number, including area code: (800) 972-3030
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading
Symbol(s):
Name of each exchange
on which registered:
Common Stock, Without Par Value
FITB
The
NASDAQ
Stock Market LLC
Depositary Shares Representing a 1/1000th Ownership Interest in a Share of
6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I
FITBI
The
NASDAQ
Stock Market LLC
Depositary Shares Representing a 1/40th Ownership Interest in a Share of
6.00% Non-Cumulative Perpetual Class B Preferred Stock, Series A
FITBP
The
NASDAQ
Stock Market LLC
Depositary Shares Representing a 1/1000th Ownership Interest in a Share of
4.95% Non-Cumulative Perpetual Preferred Stock, Series K
FITBO
The
NASDAQ
Stock Market LLC
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes: ☒ No: ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes: ☐ No: ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes: ☒ No: ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes: ☒ No: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued
its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes: ☐ No: ☒
There were 665,618,316 shares of the Bancorp’s Common Stock, without par value, outstanding as of January 31, 2025. The Aggregate Market Value of the
Voting Stock held by non-affiliates of the Bancorp was $21.7 billion as of June 30, 2024.
Table of Contents
13 Fifth Third Bancorp
DOCUMENTS INCORPORATED BY REFERENCE
This report incorporates into a single document the requirements of the U.S. Securities and Exchange Commission (the “SEC”) with respect
to annual reports on Form 10-K and annual reports to shareholders. Sections of the Bancorp’s Proxy Statement for the 2025 Annual Meeting
of Shareholders are incorporated by reference into Part III of this report.
Only those sections of this 2024 Annual Report to Shareholders that are specified in this Cross Reference Index constitute part of the
registrant’s Form 10-K for the year ended December 31, 2024. No other information contained in this 2024 Annual Report to Shareholders
shall be deemed to constitute any part of this Form 10-K nor shall any such information be incorporated into the Form 10-K and shall not be
deemed “filed” as part of the registrant’s Form 10-K.
10-K CROSS REFERENCE INDEX
PART I
Item 1.
Business
16
Employees
16, 62
Segment Information
64, 198
Average Balance Sheets
58
Analysis of Net Interest Income and Net Interest Income Changes
57
Investment Securities Portfolio
70, 127
Loan and Lease Portfolio
69, 130
Risk Elements of Loan and Lease Portfolio
77
Deposits
73
Return on Equity and Assets
49
Short-term Borrowings
75, 162
Item 1A. Risk Factors
25
Item 1B. Unresolved Staff Comments
39
Item 1C. Cybersecurity
39
Item 2.
Properties
40
Item 3.
Legal Proceedings
40
Item 4.
Mine Safety Disclosures
40
Information about our Executive Officers
41
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
43
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
105
Item 8.
Financial Statements and Supplementary Data
105
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
202
Item 9A. Controls and Procedures
202
Item 9B. Other Information
204
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection
204
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
204
Item 11.
Executive Compensation
204
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
204
Item 13.
Certain Relationships and Related Transactions, and Director Independence
204
Item 14.
Principal Accounting Fees and Services
204
PART IV
Item 15.
Exhibits, Financial Statement Schedules
205
Item 16.
Form 10–K Summary
209
SIGNATURES
210
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14 Fifth Third Bancorp
FORWARD-LOOKING STATEMENTS
This report 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 the Risk Factors section in Item 1A in this Annual Report on Form 10-K. 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. 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, including the use of artificial intelligence; (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; (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. 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 report should be read as applying mutatis mutandis to every other instance of such information appearing herein.
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15 Fifth Third Bancorp
PART I
ITEM 1. BUSINESS
General Information
Fifth Third Bancorp (the “Bancorp” or “Fifth Third”), an Ohio corporation organized in 1975, is a bank holding company (“BHC”) as defined
by the Bank Holding Company Act of 1956, as amended (the “BHCA”), and has elected to be treated as a financial holding company
(“FHC”) under the Gramm-Leach-Bliley Act of 1999 (“GLBA”) and regulations of the Board of Governors of the Federal Reserve System
(the “FRB”).
The Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio and is the indirect holding company of Fifth Third
Bank, National Association (the “Bank”). As of December 31, 2024, Fifth Third had $213 billion in assets and operates 1,089 full-service
Banking Centers and 2,080 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia,
Georgia, North Carolina and South Carolina. The Bancorp operates three main businesses: Commercial Banking, Consumer and Small
Business Banking and Wealth and Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of
December 31, 2024, had $634 billion in assets under care, of which it managed $69 billion for individuals, corporations and not-for-profit
organizations. Investor information and press releases can be viewed on the Bancorp’s Investor Relations website at ir.53.com. Information
on or accessible through our website is not deemed to be incorporated into this Annual Report on Form 10-K. Website references in this
Annual Report are merely textual references. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the
symbol “FITB.”
The Bancorp’s subsidiaries provide a wide range of financial products and services to the commercial, financial, retail, governmental,
educational, energy and healthcare sectors. This includes a variety of checking, savings and money market accounts, wealth management
solutions, payments and commerce solutions, securities products and services, insurance services and credit products such as commercial
loans and leases, mortgage loans, credit cards, installment loans and other lending products. These products and services are delivered
through a variety of channels including the Bancorp’s banking centers, other offices, telephone sales, the internet and mobile applications.
The Bank has deposit insurance provided by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund
(the “DIF”). Refer to Exhibit 21 filed as an attachment to this Annual Report on Form 10-K for a list of subsidiaries of the Bancorp as of
February 15, 2025.
Additional information regarding the Bancorp’s businesses is included in Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Availability of Financial Information
The Bancorp files reports with the SEC. Those reports include the annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and annual proxy statement, as well as any amendments to those reports. The SEC maintains an internet site that
contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at
www.sec.gov. The Bancorp’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, annual proxy
statement and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are accessible at no cost
on the Bancorp’s Investor Relations website at ir.53.com on a same day basis after they are electronically filed with or furnished to the SEC.
Information about the Bancorp’s Code of Business Conduct and Ethics (as amended from time to time), is available on Fifth Third’s
corporate website at www.53.com. In addition, any future waivers from a provision of the Fifth Third Code of Business Conduct and Ethics
covering any of Fifth Third’s directors or executive officers (including Fifth Third’s principal executive officer, principal financial officer,
and principal accounting officer or controller) will be posted at this internet address.
Competition
The Bancorp, primarily through the Bank, competes for deposits, loans and other banking services in its principal geographic markets as well
as in selected national markets as opportunities arise. In addition to traditional banking institutions, the Bancorp competes with securities
dealers, brokers, mortgage bankers, investment advisors, specialty finance, private credit, financial technology and insurance companies.
These companies compete across geographic boundaries and provide customers with meaningful alternatives to traditional banking services
in nearly all significant products. The increasingly competitive environment is primarily a result of changes in regulation, changes in
technology, product delivery systems and the accelerating pace of consolidation among financial service providers. These competitive trends
are likely to continue.
Human Capital Resources
The Bancorp’s human capital strategy is designed to attract, develop and retain talent. This strategy ensures that Fifth Third has the talent,
capabilities and organizational structure to support business needs now and in the future. As of December 31, 2024, the Bancorp had 18,616
full-time equivalent employees, compared to 18,724 as of December 31, 2023. These employees support the organization’s ambition and
purpose by upholding its values by committing to excellence, being connected and acting with creativity and courage. Fifth Third is
committed to living its values, serving its customers, delivering financial performance and being recognized as a leader in building an
engaging workplace.
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16 Fifth Third Bancorp
Engagement and Development
Fifth Third believes that an engaged workforce is one of its most valuable assets in sustaining its success. The Bancorp’s continuous listening
strategy is an important component of its inclusive culture. The Bancorp’s holistic approach to collecting, measuring and responding to
employee feedback enhances the employee experience at critical points during times of change in business or work environments. Feedback
is collected through a variety of methods, including the Employee Viewpoints Survey, which includes questions related to culture,
engagement, inclusion, employee well-being, expectations and intent to stay.
The Bancorp’s learning, development and career mobility strategy delivers personalized and accessible experiences that fuel career growth
and help retain talent. In response to employee feedback, Fifth Third continued its focus on career mobility with enhanced tools to support
internal career pathing. This includes a robust suite of learning resources covering several areas, including leadership and professional
development to foster learning and career advancement across the employee population. In 2024, employees engaged in over 255,000 hours
of discretionary learning.
Several new initiatives were introduced, including a comprehensive onboarding program for new managers, a high performing program for
senior leaders, and new offerings aimed at developing the professional and leadership skills necessary to build a strong pipeline of leaders.
Fifth Third leaders engaged in 2,800 different development offerings. Fifth Third’s commitment to compliance and risk management also
remains strong, with all employees and contingent workers completing more than 475,000 course hours on these topics.
Total Rewards – Compensation and Benefits
The Bancorp is committed to providing competitive compensation programs that attract and retain top talent, while driving the business
strategy and effectively managing risk. Fifth Third’s compensation programs are designed to reward performance and align with regulatory
expectations while reflecting the Bancorp’s values and behavioral standards. The Bancorp’s compensation philosophy is centered on creating
long-term shareholder value.
Fifth Third continuously analyzes its compensation programs to ensure all employees have equal opportunities to maximize their potential.
Fifth Third’s comprehensive benefits program is designed to address the personal and professional needs of employees and their families. In
addition to traditional benefits offerings, the Bancorp provides comprehensive support with unique programs focused on the financial,
physical, emotional and social well-being of employees.
Recruitment and Retention
The Bancorp continues to navigate the changing talent landscape by monitoring the external environment and adapting talent strategies to
meet internal needs. The Bancorp’s focus on its employee value proposition demonstrates a continued commitment to employees by
developing great leaders and evolving the employee experience. Full year turnover improved, decreasing from 16.9% in 2023 to 16.2% in
2024.
The Bancorp’s recruitment strategies enhance the organization by promoting an inclusive culture. To attract the most talented employees, the
Bancorp continues to enhance relationships with universities and partner organizations to attract top talent. Creating and developing an
inclusive workforce is important for the Bancorp’s business growth, leading to enhanced innovation while focusing on the needs of its
customers.
Acquisitions and Investments
The Bancorp’s strategy for growth includes strengthening its presence in core markets, expanding its presence in high-growth markets and
broadening its product offerings. In order to take into account the integration and other risks, the Bancorp conducts due diligence to evaluate
and identify the risks associated with possible transactions. As a result, discussions, and in some cases, negotiations regarding acquisitions
and investments may take place and future transactions involving cash, debt or equity securities may occur. These typically involve the
payment of a premium over book value and current market price, and therefore, some dilution of tangible book value and net income per
share may occur with any future transactions.
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17 Fifth Third Bancorp
Regulation and Supervision
In addition to the generally applicable state and federal laws governing businesses and employers, the Bancorp and the Bank are subject to
extensive regulation and supervision under federal and state laws and regulations applicable to financial institutions and their parent
companies. Virtually all aspects of the business of the Bancorp and the Bank are subject to specific requirements or restrictions and general
regulatory oversight. The principal objectives of state and federal banking laws and regulations and the supervision, regulation and
examination of banks and their parent companies (such as the Bank and the Bancorp) by bank regulatory agencies are the maintenance of the
safety and soundness of financial institutions, the maintenance of the federal deposit insurance system and the protection of consumers or
classes of consumers, rather than the protection of shareholders or debtholders of a bank or the parent company of a bank. The Bancorp and
its subsidiaries are subject to an extensive regulatory framework of complex and comprehensive federal and state laws and regulations
addressing the provision of banking and other financial services and other aspects of the Bancorp’s businesses and operations. The Dodd-
Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and legislation modifying Dodd-Frank, the Economic Growth,
Regulatory Relief and Consumer Protection Act of 2018 (“EGRRCPA”), will continue to impact the Bancorp and the Bank. To the extent the
following material describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statute or regulation.
While the regulatory environment has recently been in a period of rebalancing, the Bancorp expects that its business will remain subject to
extensive regulation and supervision.
The EGRRCPA amended various sections of Dodd-Frank, including section 165, which was revised to raise the asset thresholds for
determining the application of enhanced prudential standards for BHCs. The EGRRCPA’s increased asset thresholds took effect immediately
for BHCs with total consolidated assets less than $100 billion, with the exception of risk committee requirements, which now apply to
publicly traded BHCs with $50 billion or more of consolidated assets. BHCs with consolidated assets between $100 billion and $250 billion,
including the Bancorp, were subject to the enhanced prudential standards that applied to them before enactment of EGRRCPA until
December 31, 2019, when rules adopted by the FRB that tailor the applicability of enhanced prudential standards and capital and liquidity
requirements for BHCs with $100 billion or more in total consolidated assets became effective, as described in detail below.
Subsequent to the EGRRCPA, the FRB adopted a rule that adjusts the thresholds at which certain enhanced prudential standards (“EPS”)
apply to BHCs with $100 billion or more in total consolidated assets (the “EPS Tailoring Rule”) and the FRB, the Office of the Comptroller
of the Currency (the “OCC”) and FDIC adopted a rule that similarly adjusts the thresholds at which certain other capital and liquidity
standards apply to BHCs and banks with $100 billion or more in total consolidated assets (the “Capital and Liquidity Tailoring Rule” and,
together with the EPS Tailoring Rule, the “Tailoring Rules”). The Tailoring Rules establish four risk-based categories of institutions, and the
extent to which enhanced prudential standards and certain other capital and liquidity standards apply to these BHCs and banks depends on the
banking organization’s category. Under the Tailoring Rules, the Bancorp and the Bank each qualify as a Category IV banking organization
subject to the least restrictive of the requirements applicable to firms with $100 billion or more in total consolidated assets.
Regulators
The Bancorp and/or the Bank are subject to regulation and supervision primarily by the FRB, the Consumer Financial Protection Bureau (the
“CFPB”) and the OCC and additionally by certain other functional regulators and self-regulatory organizations. The Bancorp is also subject
to regulation by the SEC by virtue of its status as a public company and due to the nature of some of its businesses. The Bank is also subject
to regulation by the FDIC, which insures the Bank’s deposits as permitted by law.
The federal and state laws and regulations that are applicable to banks and to BHCs regulate, among other matters, the scope of the Bancorp’s
and the Bank’s businesses, their activities, their investments, their capital and liquidity levels, their ability to make capital distributions (such
as share repurchases and dividends), their reserves against deposits, the timing of the availability of deposited funds, the amount of loans to
individual and related borrowers and the nature, the amount of and collateral for certain loans and the amount of interest that may be charged
on loans, as applicable. Various federal and state consumer laws and regulations also affect the services provided to consumers.
The Bancorp and the Bank are required to file various reports with and are subject to examination by various regulators, including the FRB,
the OCC and the CFPB. The FRB, the OCC and the CFPB have the authority to issue orders for BHCs and banks to cease and desist from
certain banking practices and violations of conditions imposed by, or violations of agreements with, the FRB, the OCC and the CFPB. Some
of the Bancorp’s and the Bank’s regulators are also empowered to assess civil money penalties against companies or individuals in certain
situations, such as when there is a violation of a law or regulation. Applicable state and federal laws also grant the Bancorp’s regulators the
authority to impose additional requirements and restrictions on the activities of the Bancorp and the Bank and, in some situations, the
imposition of such additional requirements and restrictions will not be publicly available information.
The following discussion describes certain elements of the comprehensive regulatory framework applicable to the Bancorp and its
subsidiaries. This discussion is not intended to describe all laws and regulations applicable to the Bancorp, the Bank and the Bancorp’s other
subsidiaries.
Acquisitions
The BHCA requires the prior approval of the FRB for a BHC to acquire substantially all the assets of a bank or to acquire direct or indirect
ownership or control of more than 5% of any class of the voting shares of any bank, BHC or savings association, or to merge or consolidate
with any BHC.
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18 Fifth Third Bancorp
The BHCA generally prohibits a BHC from engaging in, or acquiring a direct or indirect interest in or control of more than 5% of any class of
the voting shares of a company that is not a bank or a BHC that engages directly or indirectly in activities other than those of banking,
managing or controlling banks or furnishing services to its banking subsidiaries, except that it may engage in and may own shares of
companies engaged in certain activities the FRB has determined to be so closely related to banking or managing or controlling banks as to be
proper incident thereto.
Financial Holding Companies
The Bancorp is registered as a BHC with the FRB under the BHCA and qualifies for and has elected to become an FHC. An FHC is permitted
to engage directly or indirectly in a broader range of activities than those permitted for a BHC under the BHCA. Permitted activities for an
FHC include securities underwriting and dealing, insurance underwriting and brokerage, merchant banking and other activities that are
declared by the FRB, in cooperation with the Treasury Department, to be “financial in nature or incidental thereto” or are declared by the
FRB unilaterally to be “complementary” to financial activities. In addition, an FHC is allowed to conduct permissible new financial activities
or acquire permissible non-bank financial companies with after-the-fact notice to the FRB. A BHC may elect to become an FHC if the BHC
is well-capitalized and is well managed and each of its banking subsidiaries is well-capitalized, is well managed and has at least a
“Satisfactory” rating under the Community Reinvestment Act (“CRA”). To maintain FHC status, a BHC must continue to meet these
requirements. The failure to meet such requirements could result in material restrictions on the activities of the FHC and may also adversely
affect the FHC’s ability to enter into certain transactions (including mergers and acquisitions) or obtain necessary approvals in connection
therewith, as well as loss of FHC status. If restrictions are imposed on the activities of an FHC, such information may not necessarily be
available to the public.
Dividends
The Bancorp is a legal entity separate and distinct from its subsidiaries and depends in part upon dividends received from its direct and
indirect subsidiaries, including the Bank, to fund its activities, including its ability to make capital distributions, such as paying dividends or
repurchasing shares. Under federal law, there are various limitations on the extent to which the Bank can declare and pay dividends to the
Bancorp, including those related to regulatory capital requirements, general regulatory oversight to prevent unsafe or unsound practices and
federal banking law requirements concerning the payment of dividends out of net profits, surplus and available earnings. Certain contractual
restrictions also may limit the ability of the Bank to pay dividends to the Bancorp. No assurances can be given that the Bank will, in any
circumstances, pay dividends to the Bancorp.
The Bancorp’s ability to declare and pay dividends is similarly limited by federal banking law and FRB regulations and policy. The FRB has
authority to prohibit BHCs from making capital distributions if they would be deemed to be an unsafe or unsound practice. The FRB has
indicated generally that it may be an unsafe or unsound practice for BHCs to pay dividends unless a BHC’s net income is sufficient to fund
the dividends and the expected rate of earnings retention is consistent with the organization’s capital needs, asset quality and overall financial
condition. In addition, the Bancorp’s ability to make capital distributions, including paying dividends and repurchasing shares, is subject to
the Bancorp complying with the automatic restrictions on capital distributions under the FRBs “Capital Rules” process discussed below (see
Regulatory Capital Requirements below).
Source of Strength
A BHC, including the Bancorp, is expected to act as a source of financial and managerial strength to each of its banking subsidiaries and to
commit resources to their support. This support may be required at times when the BHC may not have the resources to provide it or when
doing so is not otherwise in the interests of the Bancorp or its shareholders or creditors. United States (“U.S.”) banking regulators may require
a BHC to make capital injections into a troubled subsidiary bank and may charge the BHC with engaging in unsafe and unsound practices if
the BHC fails to commit resources to such a subsidiary bank or if it undertakes actions that the FRB believes might jeopardize the BHC’s
ability to commit resources to such subsidiary bank.
Under these requirements, the Bancorp may in the future be required to provide financial assistance to the Bank should it experience financial
distress. Capital loans by the Bancorp to the Bank would be subordinate in right of payment to deposits and certain other debts of the Bank. In
the event of the Bancorp’s bankruptcy, any commitment by the Bancorp to a federal bank regulatory agency to maintain the capital of the
Bank would be assumed by the bankruptcy trustee and entitled to a priority of payment.
FDIC Assessments
The Deposit Insurance Fund (“DIF”) provides insurance coverage for certain deposits, up to a standard maximum deposit insurance amount
of $250,000 per depositor per account ownership category per bank and is funded through assessments on insured depository institutions,
based on the risk each institution poses to the DIF. The Bank accepts customer deposits that are insured by the DIF and, therefore, must pay
insurance premiums. The FDIC may increase the Bank’s insurance premiums based on various factors, including the FDIC’s assessment of
its risk profile.
As of June 30, 2020, the DIF reserve ratio fell to 1.30%, below the statutory minimum of 1.35%. The FDIC, as required under the Federal
Deposit Insurance Act, established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of
1.35% within eight years. On October 18, 2022, the FDIC adopted an amended restoration plan to increase the likelihood that the reserve
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19 Fifth Third Bancorp
ratio would be restored to at least 1.35% by September 30, 2028. The FDIC’s amended restoration plan increases the initial base deposit
insurance assessment rate schedules uniformly by 2 basis points, which began with the first quarterly assessment period of 2023.
In response to the bank failures that occurred in the first half of 2023, the FDIC issued a final rule for a special deposit insurance assessment
on banking organizations with greater than $5 billion in assets to recover the losses to the DIF associated with protecting uninsured
depositors. As of December 31, 2024, the Bancorp’s estimate of its allocation of the special assessment was $252 million, based on the most
recent information provided by the FDIC. As a result of this special assessment, the Bancorp recorded expense of $28 million and $224
million during the years ended December 31, 2024 and 2023, respectively, related to this estimate. The Bancorp currently expects to pay the
special assessment to the FDIC over a total of ten quarterly assessment periods, which began with the first quarter of 2024. The estimate of
the cost associated with protecting the uninsured depositors will continue to be subject to periodic adjustment until the final loss amount is
determined by the FDIC.
Transactions with Affiliates
Federal banking laws restrict transactions between a bank and its affiliates, including a parent BHC. The Bank is subject to these restrictions,
which include quantitative and qualitative limits on the amounts and types of transactions that may take place, including extensions of credit
to affiliates, investments in the stock or securities of affiliates, purchases of assets from affiliates and certain other transactions with affiliates.
These restrictions also require that credit transactions with affiliates be collateralized and that transactions with affiliates be on market terms
or better for the bank. Generally, a bank’s covered transactions with any affiliate are limited to 10% of the bank’s capital stock and surplus
and covered transactions with all affiliates are limited to 20% of the bank’s capital stock and surplus. Dodd-Frank expanded the scope of
these regulations, including by applying them to the credit exposure arising under derivative transactions, repurchase and reverse repurchase
agreements, and securities borrowing and lending transactions. Federal banking laws also place similar restrictions on loans and other
extensions of credit by FDIC-insured banks, such as the Bank, and their subsidiaries to their directors, executive officers and principal
shareholders.
Community Reinvestment Act
The CRA generally requires insured depository institutions, including the Bank, to identify the communities they serve and to make loans and
investments and provide services that meet the credit needs of those communities. The CRA requires the OCC to evaluate the performance of
national banks (including the Bank) with respect to these CRA obligations. Depository institutions must maintain comprehensive records of
their CRA activities for purposes of these examinations. The OCC must take into account the institution’s record of performance in meeting
the credit needs of the entire community served, including low-and moderate-income neighborhoods. For purposes of CRA examinations, the
OCC rates each institution’s compliance with the CRA as “Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial
Noncompliance.” The Bank’s most recently received CRA performance rating from the OCC was Outstanding.
The CRA requires the relevant federal bank regulatory agency to consider a bank’s CRA assessment when considering the bank’s application
to conduct certain mergers or acquisitions or to open or relocate a branch office. The FRB also must consider the CRA record of each
subsidiary bank of a BHC in connection with any acquisition or merger application filed by the BHC. An unsatisfactory CRA record could
substantially delay or result in the denial of an approval or application by the Bancorp or the Bank.
On October 24, 2023, the OCC, FRB and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules
substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised
data reporting requirements taking effect January 1, 2027. Among other things, the revised rules evaluate lending outside traditional
assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based
benchmarking approach to assessment and clarify eligible CRA activities. The revised CRA regulations have been subject to an injunction
since March 29, 2024. The effective dates will be extended for each day the injunction remains in place, pending the resolution of the lawsuit.
Regulatory Capital Requirements
The Bancorp and the Bank are subject to certain risk-based capital and leverage ratio requirements under the capital adequacy rules (the
“Capital Rules”) adopted by the FRB, for the Bancorp, and by the OCC, for the Bank. These quantitative calculations are minimums, and the
FRB and OCC may determine that a banking organization, based on its size, complexity, or risk profile, must maintain a higher level of
capital in order to operate in a safe and sound manner. Failure to be well-capitalized or to meet minimum capital requirements could result in
certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on the
Bancorp’s operations or financial condition. Failure to be well-capitalized or to meet minimum capital requirements could also result in
restrictions on the Bancorp’s or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of
applications. Under the Capital Rules, the Bancorp’s and the Bank’s assets, exposures and certain off-balance sheet items are subject to risk
weights used to determine the institutions’ risk-weighted assets pursuant to the federal banking agencies’ Standardized Approach to risk-
weighting of assets. These risk-weighted assets are used to calculate the following minimum capital ratios for the Bancorp and the Bank:
•
Common Equity Tier 1 (“CET1”) Capital Ratio, equal to the ratio of CET1 capital to risk-weighted assets. CET1 capital primarily
includes common shareholders’ equity subject to certain regulatory adjustments and deductions, including with respect to goodwill,
intangible assets, certain deferred tax assets and accumulated other comprehensive income (“AOCI”). The Bancorp has elected to
exclude certain AOCI components, with the result that those components are not recognized in the Bancorp’s CET1. The FDIC,
FRB and OCC have jointly issued rules for institutions that do not apply advanced approaches to regulatory capital, including the
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20 Fifth Third Bancorp
Bancorp and the Bank. These rules simplified the capital treatment of certain items (including mortgage servicing assets, deferred
tax assets and investments in the capital of unconsolidated financial institutions) and simplified the recognition and calculation of
minority interests that are includable in regulatory capital. The advanced approaches to regulatory capital are generally required for
large, internationally active banking organizations including those designated as global systemically important BHCs and those with
total assets or cross-jurisdictional activity in excess of certain thresholds.
•
Tier 1 Risk-Based Capital Ratio, equal to the ratio of Tier 1 capital to risk-weighted assets. Tier 1 capital is primarily comprised of
CET1 capital, perpetual preferred stock and certain qualifying capital instruments.
•
Total Risk-Based Capital Ratio, equal to the ratio of total capital, including CET1 capital, Tier 1 capital and Tier 2 capital, to risk-
weighted assets. Tier 2 capital primarily includes qualifying subordinated debt and qualifying allowance for credit losses (“ACL”).
Tier 2 capital also includes, among other things, certain trust preferred securities.
•
Leverage Ratio, equal to the ratio of Tier 1 capital to quarterly average assets (net of goodwill, certain other intangible assets and
certain other deductions).
Under the Capital Rules, an institution’s eligible retained income, when considered in conjunction with capital ratios and the stress capital
buffer, provides limitations on capital distributions (including dividends and share repurchases) and certain executive compensation
arrangements for the quarter following the calculation. As of December 31, 2024, the Bancorp was not subject to these limitations.
Effective January 1, 2020, the Bancorp elected the five-year transition phase-in option for the impact of ASU 2016-13 (“CECL”) on
regulatory capital. The estimated impact of CECL on regulatory capital (“modified CECL transitional amount”) is calculated as the sum of
the day-one impact on retained earnings upon adoption of CECL (“CECL transitional amount”) and the calculated change in the ACL relative
to the day-one ACL upon adoption of CECL multiplied by a scaling factor of 25%. The scaling factor is used to approximate the difference in
the ACL under CECL relative to the incurred loss methodology. The modified CECL transitional amount was calculated each quarter for the
first two years of the five-year transition. The amount of the modified CECL transition amount was then fixed as of December 31, 2021 and
that amount is subject to the three-year phase out. Refer to the Capital Management section of Management’s Discussion and Analysis of
Financial Condition and Results of Operations for more information.
The Capital Rules also require banking organizations to maintain a stress capital buffer to avoid becoming subject to certain limitations on
capital distributions and discretionary bonuses to executive officers (see Stress Buffer Requirements below). For more information related to
the stress capital buffer, refer to Note 29 of the Notes to Consolidated Financial Statements.
The total minimum regulatory capital ratios and well-capitalized minimum ratios are reflected in the table below. The FRB has not yet
revised the well-capitalized standard for BHCs to reflect the higher capital requirements imposed under the Capital Rules. For purposes of the
FRB’s Regulation Y, including determining whether a BHC meets the requirements to be an FHC, BHCs, such as the Bancorp, must maintain
a Tier 1 Risk-Based Capital Ratio of 6.0% or greater and a Total Risk-Based Capital Ratio of 10.0% or greater. If the FRB were to apply the
same or a very similar well-capitalized standard to BHCs as that applicable to the Bank, the Bancorp’s capital ratios as of December 31, 2024
would exceed such revised well-capitalized standard. The FRB may require BHCs, including the Bancorp, to maintain capital ratios
substantially in excess of mandated minimum levels, depending upon general economic conditions and a BHC’s particular condition, risk
profile and growth plans.
The following table presents the minimum regulatory capital ratios, minimum ratio plus stress capital buffer and well-capitalized minimums
compared with the Bancorp’s and the Bank’s regulatory capital ratios as of December 31, 2024:
Regulatory Capital Ratios:
Minimum Regulatory
Capital Ratio
Minimum Ratio +
Stress Capital Buffer(a)
Well-Capitalized
Minimums(b)
Actual at
December 31, 2024
CET1 risk-based capital ratio:
Fifth Third Bancorp
4.50 %
7.70
N/A
10.57
Fifth Third Bank, National Association
4.50
7.70
6.50
12.86
Tier 1 risk-based capital ratio:
Fifth Third Bancorp
6.00
9.20
6.00
11.86
Fifth Third Bank, National Association
6.00
9.20
8.00
12.86
Total risk-based capital ratio:
Fifth Third Bancorp
8.00
11.20
10.00
13.86
Fifth Third Bank, National Association
8.00
11.20
10.00
14.19
Leverage ratio:
Fifth Third Bancorp
4.00
N/A
N/A
9.22
Fifth Third Bank, National Association
4.00
N/A
5.00
10.02
(a)
Reflects the stress capital buffer of 3.2% as of December 31, 2024.
(b)
Reflects the well-capitalized standard applicable to the Bancorp under FRB Regulation Y and the well-capitalized standard applicable to the Bank.
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21 Fifth Third Bancorp
Capital Planning and Stress Testing
The FRB’s capital plan rule requires BHCs with $100 billion or more in consolidated assets, including the Bancorp, to develop and maintain
a capital plan approved by the Board of Directors on an annual basis. The mandatory elements of the capital plan are an assessment of the
expected uses and sources of capital over a nine-quarter planning horizon, a description of all planned capital actions over the planning
horizon, a discussion of any expected changes to the BHC’s business plan that are likely to have a material impact on its capital adequacy or
liquidity, a detailed description of the BHC’s process for assessing capital adequacy and the BHC’s capital policy.
The FRB annually evaluates capital adequacy, internal capital adequacy assessment processes and capital distribution plans of BHCs with
$100 billion or more in total consolidated assets. The evaluation process is intended to help ensure that those BHCs have robust, forward-
looking capital planning processes that account for each company’s unique risks and that permit continued operations during times of
economic and financial stress.
In March 2020, the FRB adopted a final rule to integrate the annual capital planning and stress testing requirements with certain ongoing
regulatory capital requirements for large BHCs. As a result, the FRB’s supervisory stress test process is now used to calibrate the stress
capital buffer requirement for large BHCs. As a result of the EPS Tailoring Rule, Category IV BHCs, including the Bancorp, are no longer
required to conduct and disclose the results of company-run stress tests and are subject to the supervisory stress test process every two years.
The Bancorp’s most recent required assessment was completed in 2024. These supervisory stress tests are forward-looking quantitative
evaluations of the impact of stressful economic and financial market conditions on the Bancorp’s capital.
Stress Buffer Requirements
The Bancorp is subject to the stress capital buffer requirement and must maintain capital ratios above the sum of its minimum risk-based
capital ratios and the stress capital buffer to avoid certain limitations on capital distributions and discretionary bonuses to executive officers.
The FRB uses the supervisory stress test to determine the Bancorp’s stress capital buffer, subject to a floor of 2.5%. The Bancorp’s stress
capital buffer under the FRB severely adverse scenario was 3.2% as of December 31, 2024 and 2.5% as of December 31, 2023. The
Bancorp’s capital ratios have exceeded the stress capital buffer requirement for all periods presented.
Enhanced Prudential Standards
Pursuant to Title I of Dodd-Frank, certain U.S. BHCs are subject to enhanced prudential standards and early remediation requirements. As a
result, the Bancorp is subject to more stringent standards, including liquidity and capital requirements, leverage limits, stress testing,
resolution planning and risk management standards, than those applicable to smaller institutions. Certain larger banking organizations are
subject to additional enhanced prudential standards.
As discussed above, under the EPS Tailoring Rule, the Bancorp, as a Category IV banking organization, is subject to the least restrictive
enhanced prudential standards applicable to firms with $100 billion or more in total consolidated assets. As compared to enhanced prudential
standards that were applicable to the Bancorp, under the EPS Tailoring Rule, the Bancorp is no longer subject to company-run stress testing
requirements and is subject to less frequent supervisory stress tests, less frequent internal liquidity stress tests and reduced liquidity risk
management requirements.
Heightened Governance and Risk Management Standards
The OCC has published guidelines documenting expectations for the governance and risk management practices of certain large financial
institutions, including the Bank. The guidelines require covered institutions to establish and adhere to a written governance framework in
order to manage and control their risk-taking activities. In addition, the guidelines provide standards for the institutions’ boards of directors to
oversee the risk governance framework. The Bank currently has a written governance framework and associated controls.
Privacy and Data Security
The OCC, FRB, FDIC and other bank regulatory agencies have adopted guidelines for safeguarding confidential, personal customer
information. The guidelines require each financial institution, under the supervision and ongoing oversight of its board of directors or an
appropriate committee thereof, to create, implement and maintain a comprehensive written information security program designed to ensure
the security and confidentiality of customer information, protect against any anticipated threats or hazards to the security or integrity of such
information and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to
any customer. In addition, various U.S. regulators, including the OCC, FRB and the SEC, have increased their focus on cybersecurity through
guidance, examinations and regulations. The Bancorp has adopted an information security program that has been approved by the Bancorp’s
Board of Directors. For more information related to cybersecurity, refer to Part I, Item 1C of this report.
The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information
about consumers. In general, the statute requires explanations to consumers on policies and procedures regarding the disclosure of such
nonpublic personal information and, except as otherwise required by law, prohibits disclosing such information except as provided in the
banking subsidiary’s policies and procedures. The Bancorp’s banking subsidiary has implemented a privacy policy.
States are also increasingly proposing or enacting legislation that relates to data privacy and data protection such as the California Consumer
Privacy Act. The Bancorp continues to assess the requirements of such laws and proposed legislation and their applicability to the Bancorp.
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22 Fifth Third Bancorp
Moreover, these laws, and proposed legislation, are still subject to revision or formal guidance and they may be interpreted or applied in a
manner inconsistent with our understanding.
Like other lenders, the Bank and other of the Bancorp’s subsidiaries use credit bureau data in their underwriting activities. Use of such data is
regulated under the Fair Credit Reporting Act (“FCRA”), and the FCRA also regulates reporting information to credit bureaus, prescreening
individuals for credit offers, sharing of information between affiliates and using affiliate data for marketing purposes. Similar state laws may
impose additional requirements on the Bancorp and its subsidiaries.
Anti-Money Laundering and Economic Sanctions
The Bancorp is subject to federal laws that are designed to counter money laundering and terrorist financing, and transactions with certain
persons, companies or foreign governments sanctioned by the U.S. These include the Bank Secrecy Act, the Money Laundering Control Act,
the USA PATRIOT Act and regulations for the International Emergency Economic Powers Act and the Trading with the Enemy Act, as
administered by the U.S. Treasury Department’s Office of Foreign Assets Control. These laws obligate depository institutions and broker-
dealers to verify their customers’ identity, conduct customer due diligence, report on suspicious activity, file reports of transactions in
currency and conduct enhanced due diligence on certain accounts. They also prohibit U.S. persons from engaging in transactions with certain
designated restricted countries and persons. Depository institutions and broker-dealers are required by their federal regulators to maintain
robust policies and procedures in order to ensure compliance with these obligations.
Failure to comply with these laws or maintain an adequate compliance program can lead to significant monetary penalties and reputational
damage and federal regulators evaluate the effectiveness of an applicant in combating money laundering when determining whether to
approve a proposed bank merger, acquisition, restructuring or other expansionary activity. There have been a number of significant
enforcement actions by regulators, as well as state attorneys general and the Department of Justice, against banks, broker-dealers and non-
bank financial institutions with respect to these laws and some have resulted in substantial penalties, including criminal pleas. The Bancorp’s
Board has approved policies and procedures that the Bancorp believes comply with these laws.
Debit Card Interchange Fees
Dodd-Frank includes a set of rules requiring that interchange transaction fees for electronic debit transactions be reasonable and proportional
to certain costs associated with processing the transactions. Interchange fees for electronic debit transactions are limited to 21 cents plus
0.05% of the transaction, plus an additional one cent per transaction fraud adjustment. These rules impose requirements regarding routing and
exclusivity of electronic debit transactions, and generally require that debit cards be usable in at least two unaffiliated networks. On October
25, 2023, the FRB proposed to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The
proposal would also establish a regular process for updating the maximum amount every other year going forward. Fifth Third continues to
monitor the development of these proposed rule revisions.
Resolution Planning
The FRB and FDIC have previously required certain BHCs and banking institutions to periodically submit resolution plans discussing how a
company or institution could be rapidly and orderly resolved in the event of material financial distress or failure. The Bancorp, as a BHC with
less than $250 billion of assets, is no longer subject to the FRB’s resolution plan requirements. However, the Bank is still subject to resolution
planning requirements enacted by the FDIC. The FDIC’s resolution planning requirements were temporarily suspended in April 2019 as the
FDIC requested comments on how to better tailor bank resolution plans to a firm’s size, complexity and risk profile. In 2021, the FDIC
provided implementation guidance on certain aspects of its resolution plan rule and the Bank submitted a resolution plan to the FDIC by the
December 1, 2022 deadline, as required under that guidance. In June 2024, the FDIC board approved a final rule to amend its resolution plan
requirements that largely apply to insured depository institutions with more than $100 billion in assets, including the Bank. This rule requires
submission of comprehensive resolution plans that meet enhanced standards every three years, and interim submissions in intervening years.
The final rule took effect on October 1, 2024, and the Bank’s first submission under the new requirements is due on or before July 1, 2025.
Recovery Planning
On October 21, 2024, the OCC amended its enforceable Recovery Planning Guidelines to apply to banks with at least $100 billion in assets,
such as the Bank, effective January 1, 2025, subject to a twelve-month compliance period. Broadly, the guidelines require a recovery plan
that includes indicators of the risk or existence of severe stress that reflect the Bank’s particular vulnerabilities, credible options the Bank
could undertake in response to restore its financial strength and viability and an assessment and description of how these options would affect
the Bank. Recovery plans must also address overall organizational and legal entity structure and related interconnections and
interdependencies, procedures for escalating decision-making, management reports, communication procedures and any other information the
OCC requires.
Regulatory Regime for Derivatives
Title VII of Dodd-Frank imposes a registration regime and regulatory structure on the over-the-counter derivatives market, including
requirements for clearing, exchange trading, capital margin, segregation trade reporting, position limits, business conduct standards and
recordkeeping. Title VII also requires certain persons to register as a swap dealer or a security-based swap dealer. The Bank is registered with
the CFTC as a swap dealer. The CFTC, SEC and U.S. banking regulators have finalized the rules implementing Title VII applicable to the
over-the-counter derivatives markets and swap dealers. As a CFTC registered swap dealer, the Bank is subject to the requirements of Title
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23 Fifth Third Bancorp
VII, including rules related to internal and external business conduct standards, reporting, recordkeeping, mandatory clearing for certain
swaps and trade documentation and confirmation requirements. In addition, the U.S. banking regulators have finalized regulations applicable
to the Bank regarding mandatory posting, collection and segregation of margin by certain swap counterparties and capital requirements. The
Bank is not registered as a security-based swap dealer.
Broker-Dealer and Investment Adviser Regulation
Fifth Third’s broker-dealer and investment adviser subsidiaries are subject to regulation by the SEC. Financial Industry Regulation Authority
(“FINRA”) is the primary self-regulatory organization for Fifth Third’s registered broker-dealer subsidiary. Fifth Third’s broker-dealer and
investment adviser subsidiaries also are subject to additional regulation by states or local jurisdictions. The SEC and FINRA have active
enforcement functions that oversee broker-dealers and investment advisers and can bring actions that result in fines, restitution, limitation on
permitted activities, disqualification to continue to conduct certain activities and an inability to rely on certain favorable exemptions. In
addition, certain changes in the activities of a broker-dealer require approval from FINRA, and FINRA considers a variety of factors in acting
upon applications for such approval, including internal controls, capital levels, management experience and quality, prior enforcement and
disciplinary history and supervisory concerns.
Consumer Protection Regulation and Supervision
The Bancorp is subject to supervision and regulation by the CFPB with respect to federal consumer protection laws. The Bancorp is also
subject to certain state consumer protection laws, and under Dodd-Frank, state attorneys general and other state officials are empowered to
enforce certain federal consumer protection laws and regulations. State authorities have increased their focus on and enforcement of
consumer protection rules. These federal and state consumer protection laws apply to a broad range of our activities and to various aspects of
our business and include laws relating to interest rates, fair lending, disclosures of credit terms and estimated transaction costs to consumer
borrowers, debt collection practices, the use of and the provision of information to consumer reporting agencies, and the prohibition of unfair,
deceptive, or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services.
The CFPB has promulgated many mortgage-related final rules since it was established under Dodd-Frank, including rules related to the
ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation standards, high-cost mortgage
requirements, Home Mortgage Disclosure Act requirements and appraisal and escrow standards for higher priced mortgages. The mortgage-
related final rules issued by the CFPB have materially restructured the origination, servicing and securitization of residential mortgages in the
U.S. These rules have impacted, and will continue to impact, the business practices of mortgage lenders, including the Bancorp.
Future Legislative and Regulatory Initiatives
Federal and state legislators as well as regulatory agencies may introduce or enact new laws and rules, or amend existing laws and rules, that
may affect the regulation of financial institutions and their holding companies. The regulatory agencies may seek to apply higher standards to
the Bancorp and the Bank than as required by law, through supervision. The impact of any future legislative or regulatory changes, or
supervisory direction, cannot be predicted. However, such changes could affect the Bancorp’s business, financial condition and results of
operations.
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24 Fifth Third Bancorp
ITEM 1A. RISK FACTORS
The risks and uncertainties listed below present risks that could have a material impact on the Bancorp’s financial condition, the results of its
operations or its business. Some of these risks and uncertainties are interrelated and the occurrence of one or more of them may exacerbate
the effect of others. The risks and uncertainties described below are not the only ones Fifth Third faces. Additional risks and uncertainties not
presently known to Fifth Third or that Fifth Third currently believes to be immaterial may also adversely affect its business. See “Cautionary
Note Regarding Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K for more information.
CREDIT RISKS
Deteriorating credit quality has adversely impacted Fifth Third in the past and may adversely impact Fifth Third in the future.
When Fifth Third lends money or commits to lend money, the Bancorp incurs credit risk, or the risk of loss if borrowers do not repay their
loans, leases, credit cards, derivative obligations or other credit obligations. The performance of these credit portfolios significantly affects
the Bancorp’s financial results and condition. If the current economic environment were to deteriorate, more customers may have difficulty in
repaying their credit obligations which could result in a higher level of credit losses and reserves for credit losses.
Fifth Third reserves for credit losses by establishing reserves through a charge to earnings. The amount of these reserves is based on Fifth
Third’s assessment of credit losses expected to be incurred in the credit portfolios, including unfunded credit commitments. The process for
determining the amount of the ALLL and the reserve for unfunded commitments is critical to Fifth Third’s financial results and condition.
Such determination requires difficult, subjective and complex judgments about the environment, including analysis of economic or market
conditions that may impair the ability of borrowers to repay their loans.
Fifth Third may underestimate the credit losses expected to be incurred in its portfolios and have credit losses in excess of the amount
reserved. Alternatively, Fifth Third may increase the reserve because of changing economic or market conditions, including inflation, interest
rate fluctuations, higher unemployment, or other factors such as changing protections in credit agreements or changes in borrowers’ behavior.
As an example, borrowers may “strategically default,” or discontinue making payments on their real estate-secured loans if the value of the
real estate is less than what they owe, even if they are still financially able to make the payments.
Fifth Third believes that both the ALLL and the reserve for unfunded commitments are adequate to cover expected losses at December 31,
2024. However, there is no assurance that they will be sufficient to cover future credit losses associated with exposures existing at
December 31, 2024, especially if economic conditions decline. In the event of significant deterioration in economic or market conditions,
Fifth Third may be required to increase reserves in future periods, which would reduce earnings.
Fifth Third may have more credit risk and higher credit losses to the extent loans are concentrated by exposure to individual borrowers or
the location or industry of borrowers or collateral.
Fifth Third’s credit risk and credit losses can increase if its loans are concentrated among individual borrowers, borrowers engaged in the
same or similar activities, industries or geographies, or to borrowers who as a group may be uniquely or disproportionately affected by
economic or market conditions. Deterioration in economic conditions, including housing conditions or commodity and real estate values in
certain states or locations, could result in materially higher credit losses if loans are concentrated in those locations or by other factors. Fifth
Third has significant exposure to businesses in certain economic sectors such as manufacturing, real estate, financial services, insurance and
healthcare, and weaknesses in those businesses may adversely impact Fifth Third’s business, results of operations or financial condition.
Additionally, Fifth Third has a substantial portfolio of commercial and residential real estate loans, and weaknesses in residential or
commercial real estate markets may adversely impact Fifth Third’s business, results of operations or financial condition. Fifth Third also has
a portfolio of indirect secured consumer loans, and the depreciation in the value of used vehicles may adversely impact Fifth Third’s business,
results of operations or financial condition.
Problems encountered by other financial institutions could adversely affect financial markets generally and have direct and indirect
adverse effects on Fifth Third.
Fifth Third has exposure to counterparties in the financial services industry and other industries and routinely executes transactions with such
counterparties, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients.
Many of Fifth Third’s transactions with other financial institutions expose Fifth Third to credit risk in the event of default of a counterparty or
client. In addition, Fifth Third’s credit risk may be affected when the collateral it holds cannot be realized or is liquidated at prices not
sufficient to recover the full amount of the loan or derivative exposure. The commercial soundness of many financial institutions may be
closely interrelated as a result of credit, trading, clearing or other relationships between the institutions. As a result, concerns about, or a
default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other
institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies,
clearing houses, banks, securities firms and exchanges, with which the Bancorp interacts on a daily basis, and therefore could adversely affect
Fifth Third.
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25 Fifth Third Bancorp
Inability to refinance in capital markets could cause a default that impacts Fifth Third borrowers.
Some Fifth Third customers rely on additional sources of capital from outside the Bancorp. If capital markets are disrupted or unavailable to
these borrowers such that they cannot obtain funds for refinancing, those borrowers may experience a shortfall that would leave them unable
to honor short-term and/or long-term obligations to the Bancorp.
The effects of global physical climate risks, severe weather events or health emergencies may have an effect on the performance of Fifth
Third’s loan portfolios, thereby adversely impacting its results of operations.
Fifth Third’s footprint stretches from the upper Midwestern to lower Southeastern regions of the U.S. and it has offices in many other areas of
the country. Some of these regions have experienced severe weather events including hurricanes, tornadoes, fires and other natural disasters.
The nature and level of these events and the impact of global climate change upon their frequency and severity cannot be predicted. If large
scale events occur, they may significantly impact Fifth Third’s loan portfolios by damaging properties pledged as collateral as well as
impairing its borrowers’ ability to repay their loans.
Additionally, the impact of widespread health emergencies may adversely impact Fifth Third’s results of operations, such as the impacts
previously experienced from the COVID-19 pandemic. If its borrowers are adversely affected due to a widespread health emergency that
impacts Fifth Third employees, vendors or economic growth generally, Fifth Third’s financial condition and results of operations could be
adversely affected.
LIQUIDITY RISKS
Fifth Third must maintain adequate sources of funding and liquidity.
Fifth Third must maintain adequate funding sources in the normal course of business to support its operations and fund outstanding liabilities,
as well as meet regulatory expectations. Fifth Third primarily relies on bank deposits to be a low cost and stable source of funding for the
loans it makes and the operation of its business. Core deposits, which include transaction deposits and certificates of deposit $250,000 or less,
have historically provided Fifth Third with a sizeable source of relatively stable and low-cost funds (average core deposits funded 77% of
average total assets for the year ended December 31, 2024). In addition to customer deposits, sources of liquidity include investments in the
securities portfolio, Fifth Third’s sale or securitization of loans in secondary markets, the pledging of loans and investment securities to
access secured borrowing facilities through the FHLB and the FRB and Fifth Third’s ability to raise funds in money and capital markets.
Fifth Third’s liquidity and ability to fund and operate its business could be materially adversely affected by a variety of conditions and
factors, including financial and credit market disruptions and volatility or a lack of market or customer confidence in financial markets in
general, which may result in a loss of customer deposits or outflows of cash or collateral and/or the ability to access capital markets on
favorable terms.
Other conditions and factors that could materially adversely affect Fifth Third’s liquidity and funding include:
•
a lack of market or customer confidence in Fifth Third or negative news about Fifth Third, regional banks or the financial services
industry generally, which also may result in a loss of customer deposits and/or negatively affect Fifth Third’s ability to access the
capital markets;
•
the loss of customer deposits due to competition from other banks or due to alternative investments;
•
inability to sell or securitize loans or other assets;
•
increased collateral requirements;
•
increased regulatory requirements;
•
reductions in one or more of Fifth Third’s credit ratings;
•
increased utilization of revolving lines of credit by customers; and
•
systematic failure of financial market utilities relied upon by Fifth Third to settle intrabank payment activity.
A reduction in Fifth Third’s credit rating could adversely affect its ability to retain deposits, borrow funds (including by raising the cost of
borrowings substantially) and could cause creditors and business counterparties to raise collateral requirements or take other actions that
could adversely affect Fifth Third’s ability to raise liquidity or capital. Many of the above conditions and factors may be caused by events
over which Fifth Third has little or no control. There can be no assurance that significant disruption and volatility in the financial markets will
not occur again in the future.
If Fifth Third is unable to continue to fund assets through customer bank deposits or access capital markets on favorable terms or if Fifth
Third suffers an increase in borrowing costs or otherwise fails to manage liquidity effectively, Fifth Third’s liquidity, operating margins and
financial results and condition may be materially adversely affected. Fifth Third may also need to raise additional capital and liquidity
through the issuance of stock, which could dilute the ownership of existing stockholders, or reduce or even eliminate common stock
dividends or share repurchases to preserve capital and liquidity.
Fifth Third and/or the holders of its securities could be adversely affected by unfavorable ratings from rating agencies.
Fifth Third’s ability to access the capital markets is important to its overall funding profile. This access is affected by the ratings assigned by
rating agencies to Fifth Third, certain of its subsidiaries and particular classes of securities they issue. The interest rates that Fifth Third pays
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26 Fifth Third Bancorp
on its securities are also influenced by, among other things, the credit ratings that it, its subsidiaries and/or its securities receive from
recognized rating agencies. A downgrade to Fifth Third or its subsidiaries’ credit rating could affect its ability to access the capital markets,
increase its borrowing costs and negatively impact its profitability. A ratings downgrade to Fifth Third, its subsidiaries or their securities
could also create obligations or liabilities of Fifth Third under the terms of its outstanding securities that could increase Fifth Third’s costs or
otherwise have a negative effect on its results of operations or financial condition.
Additionally, a downgrade of the credit rating of any particular security issued by Fifth Third or its subsidiaries could negatively affect the
ability of the holders of that security to sell the securities and the prices at which any such securities may be sold.
Other rating agencies may also take actions to downgrade their ratings of the securities issued by Fifth Third or its subsidiaries. There can be
no assurances that Fifth Third or its subsidiaries will retain any specific rating from any specific rating agency.
If Fifth Third is unable to maintain or grow its deposits, it may be subject to paying higher funding costs.
The total amount that Fifth Third pays for funding costs is dependent, in part, on Fifth Third’s ability to maintain or grow its deposits. If Fifth
Third is unable to sufficiently maintain or grow its deposits to meet liquidity objectives, it may be subject to paying higher funding costs.
Fifth Third competes with banks and other financial services companies for deposits. If competitors raise the rates they pay on deposits, Fifth
Third’s funding costs may increase, either because Fifth Third raises rates to avoid losing deposits or because Fifth Third loses deposits and
must rely on more expensive sources of funding. Also, customers typically move money from bank deposits to alternative investments during
rising interest rate environments. Customers may also move noninterest-bearing deposits to interest-bearing accounts increasing the cost of
those deposits. Checking and savings account balances and other forms of customer deposits may decrease when customers perceive
alternative investments, such as the stock market, as providing a better risk/return trade-off. Fifth Third’s bank customers could take their
money out of the Bank and put it in alternative investments, causing Fifth Third to lose a lower-cost source of funding. Higher funding costs
reduce Fifth Third’s net interest margin and net interest income.
The Bancorp’s ability to receive dividends from its subsidiaries accounts for most of its revenue and could affect its liquidity and ability to
pay dividends.
Fifth Third Bancorp is a separate and distinct legal entity from its subsidiaries. Fifth Third Bancorp typically receives substantially all of its
revenue from dividends from its subsidiaries. These dividends are the principal source of funds to pay dividends on Fifth Third Bancorp’s
stock and interest and principal on its debt. The ability of Fifth Third Bancorp’s subsidiaries to pay dividends or make other payments or
distributions depends on their respective operating results and may be restricted by, among other things, regulatory constraints, prevailing
economic conditions (including interest rates) and financial, business and other factors, many of which are beyond the control of Fifth Third
Bancorp. Various federal and/or state laws and regulations, as well as regulatory expectations, limit the amount of dividends that the
Bancorp’s banking subsidiary and certain nonbank subsidiaries may pay to the Bancorp. Regulatory scrutiny of liquidity and capital levels at
BHCs and insured depository institutions has resulted in increased regulatory focus on all aspects of capital planning, including dividends and
other distributions to shareholders of banks such as the parent BHCs. In addition, Fifth Third Bancorp’s right to participate in a distribution of
assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors.
Regulatory limitations on the Bancorp’s ability to receive dividends from its subsidiaries, economic conditions and other financial or business
factors could have a material adverse effect on its liquidity and ability to pay dividends on stock or interest and principal on its debt and to
engage in share repurchases. For further information, refer to Regulation and Supervision in Item 1 of this Annual Report on Form 10-K and
Note 3 of the Notes to Consolidated Financial Statements.
OPERATIONAL RISKS
Fifth Third is exposed to cybersecurity risks that create both operational and reputational risk for the Bank and its customers across all
lines of business.
In today’s digital world, more and more of Fifth Third’s business is conducted primarily via digital and mobile technology and information
management systems. This includes the use of cloud computing, digital applications and third-party providers that host and store sensitive
employee and customer information. Failures, interruptions of service or breaches in the security of these environments occur across the
financial services industry with some frequency, including at Fifth Third and its third-party providers. If an event of this nature occurred at
Fifth Third or one of its third-party providers and such event proved to be material, this could result in disruptions to Fifth Third’s accounting,
deposit, lending and other systems, and adversely affect its customer relationships. While Fifth Third heavily invests in information security,
technical resiliency, business continuity and disaster recovery planning, and has policies and procedures designed to detect, limit, and prevent
the impact of these possible events, there can be no assurance that any such failure, interruption or security breach will not occur or, if any
does occur, that it can be remediated in such a way to eliminate the risk.
There will always be efforts on the part of threat actors to breach information security at financial institutions or with respect to financial
transactions. There have been several recent instances involving financial services, credit bureaus and consumer-based companies reporting
the unauthorized disclosure of client or customer information or the destruction or theft of corporate data, by both private individuals and
foreign governments. In addition, because the techniques used to cause such security breaches change frequently, often are not recognized
until launched against a target and may originate from remote and less regulated areas around the world, Fifth Third may be unable to
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proactively address these techniques or to implement adequate preventative measures. Threat actors, including nation state attackers, could
also use artificial intelligence for malicious purposes, increasing the frequency, complexity and effectiveness of their attacks. Despite Fifth
Third’s efforts to prevent a cyber-attack and monitoring of data flow inside and outside Fifth Third, due to the increasing sophistication of
techniques used by attackers to conceal access to systems, a successful cyber-attack could persist for an extended period of time before being
detected, and, following detection, it could take considerable time for Fifth Third to obtain full and reliable information about the
cybersecurity incident and the extent, amount and type of information compromised. During the course of an investigation, Fifth Third may
not necessarily know the full effects of the incident or how to remediate it, and actions and decisions that are taken or made in an effort to
mitigate risk may further increase the costs and other negative consequences of the incident. Furthermore, financial services companies are
regularly the target of cyber-attacks such as distributed denial of service, social engineering and ransomware attacks. The unintentional or
willful acts or omissions of employees also remains the primary avenue through which threat actors attempt to gain access to company
networks, information systems, data and credentials.
An additional risk is the use of third- and fourth-party providers to host critical data and platforms for Fifth Third, or in some cases provide
services to Fifth Third domestically and internationally. Fifth Third has a third-party risk program to oversee third- and fourth-party
providers. This does not eliminate all risk and its failure to do so could result in customer losses, operational issues, litigation, regulatory
actions and reputational damage. Industry trends demonstrate a shift towards the use of cloud providers, Software as a Service partners and
hosted platforms rather than traditional software services that can be operated from within a company’s firewall and data centers, and the
implementation and development of new and emerging technologies such as artificial intelligence. These additional risks are further
heightened through the increasing use of near real-time money movement solutions such as Zelle, and increase the difficulty to detect,
prevent and recover fraudulent transactions. These additional risks are increasing the costs of Fifth Third’s investment in technology and
cybersecurity and require further investment in cyber-related and data loss event insurance which Fifth Third has in place. Though Fifth Third
has insurance against some cybersecurity risks and attacks, it may not be sufficient to offset the impact of a material loss event. Future
investment in these areas could have higher than expected costs and/or result in operating inefficiencies, which could increase the costs
associated with the implementation as well as ongoing operations.
If personal, confidential or proprietary information of customers or clients in the Bancorp’s or such vendors’ or other third-parties’ possession
were to be mishandled or misused, the Bancorp could suffer significant regulatory consequences, reputational damage and financial loss.
Fifth Third relies on its systems and certain third-party service providers and certain failures (including those related to cybersecurity or
weather events exacerbated by climate change) could materially adversely affect operations.
Fifth Third’s operations, including its financial and accounting systems, use computer systems and telecommunications networks operated by
both Fifth Third and third-party service providers. Fifth Third may not be sufficiently resilient and may not recover from significant
operational events in a timely manner which could create operational and reputational risks. Additionally, Fifth Third collects, processes and
stores sensitive consumer data by utilizing those and other systems and networks. Fifth Third has security, backup and recovery systems in
place, as well as a business continuity plan to ensure the systems will not be inoperable. Fifth Third also has security to prevent unauthorized
access to the systems. In addition, Fifth Third requires its third-party service providers to maintain similar controls. However, Fifth Third
cannot be certain that the measures will be successful, particularly given the rapidly evolving sophistication of threat actors and technologies.
A security breach in these systems or the loss or corruption of confidential information such as business results, transaction records and
related information could adversely impact Fifth Third’s ability to provide timely and accurate financial information in compliance with legal
and regulatory requirements, which could result in sanctions from regulatory authorities, significant reputational harm and the loss of
customer confidence in Fifth Third. Additionally, security breaches or the loss, theft or corruption of customer information such as social
security numbers, credit card numbers, account balances or other information could result in losses by Fifth Third's customers, litigation,
regulatory sanctions, lost customers and revenue, increased costs and significant reputational harm.
Fifth Third’s necessary dependence upon automated systems to record and process its transaction volume poses the risk that technical system
flaws or employee errors, tampering or manipulation of those systems could result in losses and may be difficult to detect. Fifth Third may
also be subject to disruptions of its operating systems arising from events that are beyond its control (for example, cyber-attacks, equipment
failure, or electrical or telecommunications outages).
Third-party service providers with which the Bancorp does business both domestically and offshore, as well as vendors and other third parties
with which the Bancorp’s customers do business, can also be sources of operational risk to the Bancorp, particularly where processes are
highly concentrated or in widespread use on critical Bancorp systems, or activities of customers are beyond the Bancorp’s security and
control systems, such as through the use of the internet, personal computers, tablets, smart phones and other mobile services. Security
breaches or system failures affecting the Bancorp or its third-party providers can increase operational costs and reduce customer satisfaction,
as the Bancorp takes steps to protect its systems and safeguard confidential information. If personal, confidential or proprietary information of
customers or clients in the Bancorp’s or such vendors’ or other third parties’ possession were to be mishandled or misused, the Bancorp could
suffer significant regulatory consequences, reputational damage and financial loss. Such mishandling or misuse could include circumstances
where, for example, such information was erroneously provided to parties who are not permitted to have the information, either through the
fault of the Bancorp’s systems, employees or counterparties, or where such information was intercepted or otherwise compromised by threat
actors. The Bancorp may be subject to disruptions of its operating systems arising from events that are wholly or partially beyond the
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Bancorp’s control, which may include, for example, security breaches; electrical or telecommunications outages; failures of computer
components or servers or other damage to the Bancorp’s property or assets; natural disasters or severe weather conditions; health
emergencies; or events arising from local or larger-scale political events, including outbreaks of hostilities or terrorist acts. While the Bancorp
believes that its current business continuity plans are both sufficient and adequate, there can be no assurance that such plans will fully
mitigate all potential business continuity risks to the Bancorp or its customers and clients.
Any failures or disruptions of the Bancorp’s systems or operations could give rise to losses in service to customers and clients, adversely
affect the Bancorp’s business and results of operations by subjecting the Bancorp to losses or liability, or require the Bancorp to expend
significant resources to correct the failure or disruption, as well as by exposing the Bancorp to reputational harm, litigation, regulatory fines
or penalties or losses not covered by insurance. In addition, any security compromise or information technology system disruptions in the
financial services industry as a whole, whether actual or perceived, could interrupt the Bancorp’s business or operations, harm its reputation,
erode borrower confidence, negatively affect the Bancorp’s ability to attract new members, or subject it to third-party lawsuits, regulatory
fines or other action or liability, which could adversely affect Fifth Third’s business and results of operations. The Bancorp could also be
adversely affected if it loses access to information or services from a third-party service provider as a result of a security breach or system or
operational failure, or disruption affecting the third-party service provider. Fifth Third’s insurance may be inadequate to compensate for
failures by, or affecting, third-party service providers upon which Fifth Third relies.
Fifth Third may not be able to effectively manage organizational changes and implement key initiatives in a timely fashion, or at all, due
to competing priorities which could adversely affect its business, results of operations, financial condition and reputation.
Fifth Third is subject to rapid changes in technology, regulation and product innovation, and faces intense competition for customers, sources
of revenue, capital, services, qualified employees and other essential business resources. In order to meet these challenges, Fifth Third is or
may be engaged in numerous critical strategic initiatives at the same time. Accomplishing these initiatives may be complex, time intensive
and require significant financial, technological, management and other resources. These initiatives may consume management’s attention and
may compete for limited resources. In addition, organizational changes may need to be implemented throughout Fifth Third as a result of the
new products, services, partnerships and processes that arise from the execution of these various strategic initiatives. Fifth Third may have
difficulty managing these organizational changes and executing these initiatives effectively in a timely fashion, or at all. Fifth Third’s failure
to do so could expose it to litigation or regulatory action and may damage Fifth Third’s business, results of operations, financial condition and
reputation.
Fifth Third may not be able to successfully implement future information technology system enhancements, which could adversely affect
Fifth Third’s business operations and profitability.
Fifth Third invests significant resources in information technology system enhancements in order to provide functionality and security at an
appropriate level for ongoing product development and process re-engineering. Fifth Third may not be able to successfully implement and
integrate future system enhancements, which could adversely impact the ability to provide timely and accurate financial information in
compliance with legal and regulatory requirements, which could result in sanctions from regulatory authorities. Such sanctions could include
fines and result in reputational harm and have other negative effects. Failure to properly utilize system enhancements that are implemented in
the future could result in impairment charges that adversely impact Fifth Third’s financial condition and results of operations and could result
in significant costs to remediate or replace the defective components. In addition, Fifth Third may incur significant training, licensing,
maintenance, consulting, depreciation expense and amortization expenses during and after systems implementations, and any such costs may
continue for an extended period of time. A failure to maintain or enhance Fifth Third’s competitive position with respect to technology,
whether because of a failure to anticipate client expectations or other necessary changes, a failure in the performance of technological
developments or an untimely roll out of developments, may cause Fifth Third to lose market share or incur additional expense.
New technological advancements may subject Fifth Third to additional risks.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven
products and services (including those related to or involving artificial intelligence, machine learning, blockchain and other distributed ledger
technologies), and an established and growing demand for mobile and other phone and computer banking applications. Fifth Third’s future
success depends, in part, upon Fifth Third’s ability to address the needs of its customers by using technology to provide products and services
that will satisfy customer demands, as well as to create additional efficiencies in its operations. Many of Fifth Third’s competitors have
substantially greater resources to invest in technological improvements. Fifth Third may not be able to effectively implement new technology
driven products and services or be successful in marketing these products and services to its customers. In addition, Fifth Third’s
implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, in Fifth Third’s
business processes may have unintended consequences due to its limitations or its failure to use them effectively. In addition, cloud
technologies are also critical to the operation of Fifth Third’s systems, and its reliance on cloud technologies is growing. Failure to
successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on Fifth
Third’s business, financial condition and results of operations.
Furthermore, any new technology could have a significant impact on the effectiveness of Fifth Third’s system of internal controls. Failure to
successfully manage these risks in the development and implementation of new lines of business, new products or services and/or new
technologies could have a material adverse effect on Fifth Third’s business, financial condition and results of operations.
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Fifth Third may experience losses related to fraud, theft or violence.
Fifth Third has experienced, and may experience again in the future, losses incurred due to customer or employee fraud, theft or physical
violence. Additionally, physical violence may negatively affect Fifth Third’s key personnel, facilities or systems. These losses may be
material and negatively affect Fifth Third’s results of operations, financial condition or prospects. These losses could also lead to significant
reputational risks and other effects. The industry fraud threat continues to evolve, including but not limited to, card fraud, check fraud,
electronic fraud, wire fraud, social engineering and phishing attacks for identity theft and account takeover. Nationally, reported incidents of
fraud and other financial crimes have increased. Increased use of the internet and telecommunications technologies (including mobile
devices) to conduct financial and other business transactions and operations, coupled with the increased sophistication and activities of
organized crime, perpetrators of fraud, hackers, terrorists and others increases Fifth Third’s security risks. Fifth Third continues to invest in
fraud prevention in the forms of people and systems designed to prevent, detect and mitigate the customer and financial impacts.
Fifth Third could suffer if it fails to attract and retain skilled personnel.
Fifth Third’s success depends, in large part, on its ability to attract and retain key individuals. Competition for qualified candidates in the
activities and markets that Fifth Third serves is intense, which may increase Fifth Third’s expenses and may result in Fifth Third not being
able to hire candidates or retain them. If Fifth Third is not able to hire qualified candidates or retain its key personnel, Fifth Third may be
unable to execute its business strategies and may suffer adverse consequences to its business, operations and financial condition.
Compensation paid by financial institutions such as Fifth Third is heavily regulated, particularly under Dodd-Frank, which affects the amount
and form of compensation Fifth Third pays to hire and retain talented employees. If Fifth Third is unable to attract and retain qualified
employees, or do so at rates necessary to maintain its competitive position, or if compensation costs required to attract and retain employees
become more expensive, Fifth Third’s performance, including its competitive position, could be materially adversely affected.
Fifth Third may experience operational disruption from the effects of climate change.
Fifth Third faces operational risk from the effects of climate change as an increase in severe weather may cause closures, damage to
infrastructure or damage to Fifth Third’s physical locations or other assets that may disrupt the physical operation of the Bancorp. These
interruptions may impair Fifth Third’s ability to operate and may interfere with its ability to carry out business and serve clients and
customers.
LEGAL AND REGULATORY COMPLIANCE RISKS
Fifth Third and/or its affiliates are or may become involved from time to time in information-gathering requests, investigations and
litigation, regulatory or other enforcement proceedings by various governmental regulatory agencies and law enforcement authorities, as
well as self-regulatory agencies which may lead to adverse consequences.
Fifth Third and/or its affiliates are or may become involved from time to time in information-gathering requests, reviews, investigations and
proceedings (both formal and informal) by governmental regulatory agencies and law enforcement authorities, including but not limited to the
FRB, OCC, CFPB, SEC, FINRA, U.S. Department of Justice, etc., as well as state and other governmental authorities and self-regulatory
bodies, regarding their respective customers and businesses. Also, a violation of law or regulation by another financial institution may give
rise to an inquiry or investigation by regulators or other authorities of the same or similar practices by Fifth Third. In addition, the complexity
of the federal and state regulatory and enforcement regimes in the U.S. means that a single event or topic may give rise to numerous and
overlapping investigations and regulatory proceedings. Furthermore, Fifth Third and certain of its directors and officers have been named
from time to time as defendants in various class actions and other litigation relating to Fifth Third’s business and activities, as well as
regulatory or other enforcement proceedings. Past, present and future litigation have included or could include claims for substantial
compensatory and/or punitive damages or claims for indeterminate amounts of damages. Investigations by regulatory authorities may from
time to time result in civil or criminal referrals to law enforcement. Enforcement authorities may seek admissions of wrongdoing and, in some
cases, criminal pleas as part of the resolutions of matters and any such resolution of a matter involving Fifth Third which could lead to
increased exposure to private litigation, could adversely affect Fifth Third’s reputation and could result in limitations on Fifth Third’s ability
to do business in certain jurisdictions. Additionally, in some cases, regulatory authorities may take supervisory actions that are considered to
be confidential supervisory information which may not be publicly disclosed.
Each of the matters described above may result in material adverse consequences, including without limitation, adverse judgments,
settlements, fines, penalties, injunctions or other actions, amendments and/or restatements of Fifth Third’s SEC filings and/or financial
statements, as applicable, and/or determinations of material weaknesses in its disclosure controls and procedures. In addition, responding to
information-gathering requests, reviews, investigations and proceedings, regardless of the ultimate outcome of the matter, could be time-
consuming and expensive.
Like other large financial institutions and companies, Fifth Third is also subject to risk from potential employee misconduct, including non-
compliance with policies and improper use or disclosure of confidential information. Substantial legal liability or significant regulatory or
other enforcement action against Fifth Third could materially adversely affect its business, financial condition or results of operations and/or
cause significant reputational harm to its business. The outcome of lawsuits and regulatory proceedings may be difficult to predict or
estimate. Although Fifth Third establishes accruals for legal proceedings when information related to the loss contingencies represented by
those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated, Fifth Third does not have accruals
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for all legal proceedings where it faces a risk of loss. In addition, due to the inherent subjectivity of the assessments and unpredictability of
the outcome of legal proceedings, amounts accrued may not represent the ultimate loss to Fifth Third from the legal proceedings in question.
Thus, Fifth Third’s ultimate losses may be higher, and possibly significantly so, than the amounts accrued for legal loss contingencies, which
could adversely affect Fifth Third’s results of operations.
In addition, there has been a trend of public settlements with governmental agencies that may adversely affect other financial institutions, to
the extent such settlements are used as a template for future settlements. The uncertain regulatory enforcement environment makes it difficult
to estimate probable losses, which can lead to substantial disparities between legal reserves and actual settlements or penalties.
For further information on specific legal and regulatory proceedings, refer to Note 19 of the Notes to Consolidated Financial Statements.
Fifth Third may be required to repurchase residential mortgage loans or reimburse investors and others as a result of breaches in
contractual representations and warranties.
Fifth Third sells residential mortgage loans to various parties, including government-sponsored enterprises (“GSEs”) and other financial
institutions that purchase residential mortgage loans for investment or private label securitization. Fifth Third may be required to repurchase
residential mortgage loans, indemnify the securitization trust, investor or insurer, or reimburse the securitization trust, investor or insurer, for
credit losses incurred on loans in the event of a breach of contractual representations or warranties that is not remedied within a specified
period (usually 60 days or less) after Fifth Third receives notice of the breach. Contracts for residential mortgage loan sales to the GSEs
include various types of specific remedies and penalties that could be applied to inadequate responses to repurchase requests. As a result,
Fifth Third has established reserves in its consolidated financial statements for probable losses related to the residential mortgage loans it has
sold. If economic conditions or the housing market deteriorate or future investor repurchase demand and Fifth Third’s success at appealing
such repurchase requests differ from expectations, Fifth Third could have increased repurchase obligations and increased loss severity on
repurchases, requiring material additions to the repurchase reserve. Due to uncertainties relating to these factors, there can be no assurance
that the reserves Fifth Third establishes will be adequate or that the total amount of losses incurred will not have a material adverse effect on
Fifth Third’s financial condition or results of operations.
Fifth Third is subject to extensive governmental regulation which could adversely impact Fifth Third or the businesses in which Fifth
Third is engaged.
Government regulation and legislation subject Fifth Third and other financial institutions to restrictions, oversight and/or costs that may have
an impact on Fifth Third’s business, financial condition, results of operations or the price of its common stock.
Fifth Third is subject to extensive federal and state regulation, supervision and legislation that govern almost all aspects of its operations and
limit the businesses in which Fifth Third may engage. These laws and regulations may change from time to time and are primarily intended
for the protection of consumers, borrowers and depositors and are not designed to protect security-holders. In the past decade, the scope of the
laws and regulations and the intensity of the supervision to which Fifth Third is subject increased in response to the 2008-2009 financial crisis
as well as other factors such as technological and market changes. Compliance with these laws and regulations has resulted in and will
continue to result in additional costs, which could be significant, and may have a material and adverse effect on Fifth Third’s results of
operations. In addition, if Fifth Third does not appropriately comply with current or future legislation and regulations, especially those that
apply to its consumer operations, which has been an area of heightened focus, Fifth Third may be subject to fines, penalties or judgments, or
material regulatory restrictions on its businesses, which could adversely affect operations and, in turn, financial results. Additionally, actions
by regulatory agencies or significant litigation against Fifth Third could cause it to devote significant time and resources to defending itself
and may lead to penalties that materially affect Fifth Third and its shareholders. Future changes in laws or regulations (including tax laws and
regulations such as the Inflation Reduction Act) or their interpretations or enforcement may also be materially adverse to Fifth Third and its
shareholders or may require Fifth Third to expend significant time and resources to comply with such requirements. In addition, as climate
change issues become more prevalent, the U.S. and foreign governments are beginning to respond to these issues. The evolving federal and
state government focus on climate change may result in new environmental regulations, including disclosure requirements from other
jurisdictions in which the Bank operates that could result in additional compliance costs. Similarly, the impact of domestic and international
events related to financial crime such as fraud, money laundering, and economic sanctions will continue to be an area of constant change,
risk, and regulatory focus which pose ongoing regulatory, compliance, operational and financial risks.
It is anticipated that the Trump administration will promulgate a number of executive orders and propose legislation that could directly
impact the regulation of the financial services industry, many of which may mark a departure from the Biden administration’s regulatory
agenda that has included a heightened focus on the risks arising from climate change, fair lending, consumer protection, Bank Secrecy Act
and anti-money laundering requirements, topics related to social equity, executive compensation, and increased capital and liquidity, as well
as limits on share buybacks and dividends. It is uncertain if the implementation of any of these policies would impact Fifth Third, and if so,
what the impact would be. We expect the Trump administration will seek to implement a regulatory reform agenda that is significantly
different than that of the Biden administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal
banking agencies. It is not possible at this time to determine whether changes in the administration may change the regulatory focus and/or
implementation of any regulations, policies or reforms.
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31 Fifth Third Bancorp
Fifth Third cannot predict whether any pending or future legislation will be adopted or the substance and impact of any such new legislation
on Fifth Third. Changes in regulation and supervisory and enforcement focus could affect Fifth Third in a substantial way and could have an
adverse effect on its business, financial condition and results of operations. Additionally, legislation or regulatory reform could affect the
behaviors of third parties that Fifth Third deals with in the course of business, such as rating agencies, insurance companies and investors.
In addition, changes in laws or regulations that affect Fifth Third’s customers and business partners could negatively affect Fifth Third’s
revenues and expenses. Certain changes in laws such as tax law reforms that impose limitations on the deductibility of interest may decrease
the demand for Fifth Third’s products or services and could negatively affect its revenues and results of operations. Heightened standards
under proposed and recently finalized laws or regulations, or regulations soon to enter into force whose enforcement is yet to begin (such as,
for example, capital and liquidity rules, or heightened Community Reinvestment Act standards), may result in increased obligations and
compliance costs, may result in supervisory or enforcement action and may factor into Fifth Third’s ability to expand services and/or engage
in new actions. Other changes in laws or regulations could cause Fifth Third’s third-party service providers and other vendors to increase the
prices they charge to Fifth Third and negatively affect Fifth Third’s expenses and financial results.
Fifth Third could suffer from unauthorized use of intellectual property.
Fifth Third develops for itself, and licenses from others, intellectual property for use in conducting its business. This intellectual property has
been, and may be, subject to misappropriation or infringement by third parties as well as claims that Fifth Third’s use of certain technology or
other intellectual property infringes on rights owned by others. Fifth Third has been, and may be, subject to disputes and/or litigation
concerning these claims and could be held responsible for significant damages covering past activities and substantial fees to continue to
engage in these activities in the future. Fifth Third may also be unable to acquire rights to use certain intellectual property that is important for
its business and may be unable to effectively engage in critical business activities. If Fifth Third is unable to protect or acquire rights to use
intellectual property it owns or licenses, it may lose certain competitive advantages, incur expenses and/or lose revenue and may suffer harm
to its business results and financial condition.
Fifth Third is subject to various regulatory requirements that may limit its operations and potential growth.
Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions and their holding
companies, the FRB, the FDIC, the CFPB and the OCC have the authority to compel or restrict certain actions by the Bancorp and the Bank.
The Bancorp and the Bank are subject to such supervisory authority and, more generally, must, in certain instances, obtain prior regulatory
approval before engaging in certain activities or corporate decisions. There can be no assurance that such approvals, if required, would be
forthcoming or that such approvals would be granted in a timely manner. Failure to receive any such approval, if required, could limit or
impair the Bancorp’s operations, restrict its growth, ability to compete, innovate or participate in industry consolidation and/or affect its
dividend policy. Such actions and activities that may be subject to prior approval include, but are not limited to, increasing dividends or other
capital distributions by the Bancorp or the Bank, entering into a merger or acquisition transaction, acquiring or establishing new branches and
entering into certain new businesses.
Failure by the Bancorp or the Bank to meet the applicable eligibility requirements for FHC status (including capital and management
requirements and that the Bank maintain at least a “Satisfactory” CRA rating) may result in restrictions on certain activities of the Bancorp,
including the commencement of new activities and mergers with or acquisitions of other financial institutions and could ultimately result in
the loss of FHC status.
Fifth Third and other financial institutions are highly regulated and subject to extensive oversight, supervision and examination by regulators,
including the FRB, OCC, FDIC, CFPB, SEC, CFTC, FINRA, the National Futures Association and other state, federal and self-regulatory
entities. Fifth Third is also subject to certain regulatory requirements as a result of its banking activity including with respect to stress testing,
liquidity and capital levels, asset quality, provisioning, AML/BSA, fair lending, consumer compliance, protection of customer information
and other prudential matters and efforts to ensure that financial institutions take steps to improve their risk management and prevent future
crises. For more information, refer to Regulation and Supervision—Regulatory Regime for Derivatives in Item 1 of this Annual Report on
Form 10-K.
In this regard, government authorities, including the bank regulatory agencies and law enforcement, are also pursuing aggressive enforcement
actions with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and
perceived compliance failures and may also adversely affect Fifth Third’s ability to enter into certain transactions or engage in certain
activities, or obtain necessary regulatory approvals in connection therewith. The government enforcement authority includes, among other
things, the ability to assess significant civil or criminal monetary penalties, fines, or restitution; to issue cease and desist or removal orders;
and to initiate injunctive actions against banking organizations and institution-affiliated parties. These enforcement actions may be initiated
for violations of laws and regulations and unsafe or unsound practices.
In some cases, regulatory agencies may take supervisory actions that may not be publicly disclosed, which restrict or limit a financial
institution. Finally, as part of Fifth Third’s regular examination process, the Bancorp and the Bank’s respective regulators may advise it and
its banking subsidiary to operate under various restrictions as a prudential matter. Such supervisory actions or restrictions, if and in whatever
manner imposed, could negatively affect Fifth Third’s ability to engage in new activities and certain transactions, as well as have a material
adverse effect on Fifth Third’s business and results of operations and may not be publicly disclosed.
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32 Fifth Third Bancorp
Fifth Third could face serious negative consequences if its third-party service providers, business partners, customers or investments fail
to comply with applicable laws, rules or regulations.
Fifth Third is expected to oversee the legal and regulatory compliance of its business endeavors, including those performed by third-party
service providers, business partners, customers, other vendors and certain companies in which Fifth Third has invested. Legal authorities and
regulators could hold Fifth Third responsible for failures by these parties to comply with applicable laws, rules or regulations. These failures
could expose Fifth Third to significant litigation or regulatory action that could limit its activities or impose significant fines or other financial
losses. Additionally, Fifth Third could be subject to significant litigation from consumers or other parties harmed by these failures and could
suffer significant losses of business and revenue, as well as reputational harm as a result of these failures.
As a regulated entity, the Bancorp is subject to certain capital requirements that may limit its operations, potential growth and ability to
pay or increase dividends on its common stock or to repurchase its capital stock.
As a BHC and an FHC, the Bancorp is subject to the comprehensive, consolidated supervision and regulation of the FRB, including risk-
based and leverage capital requirements, investment practices, dividend policy and growth. The Bancorp must maintain certain risk-based and
leverage capital ratios as required by the FRB which can change depending upon general economic conditions and the Bancorp’s particular
condition, risk profile and growth plans. Compliance with the capital requirements, including leverage ratios, may limit operations that
require the intensive use of capital and could adversely affect the Bancorp’s ability to expand or maintain present business levels.
Failure by the Bank to meet applicable capital requirements could subject it to a variety of enforcement actions available to the federal
regulatory authorities. These include limitations on the ability of the Bancorp to pay dividends and/or repurchase shares, the issuance by the
regulatory authority of a capital directive to increase capital, loss of FHC status and the termination of deposit insurance by the FDIC.
The Bancorp is subject to the stress capital buffer requirement and must maintain capital ratios above its buffered minimum (regulatory
minimum plus stress capital buffer) in order to avoid certain limitations on capital distributions and discretionary bonuses to executive
officers. The FRB uses the supervisory stress test to determine the Bancorp’s stress capital buffer, subject to a floor of 2.5%. The Bancorp’s
stress capital buffer under the FRB severely adverse scenario was 3.2% as of December 31, 2024. Further changes to applicable capital and
liquidity requirements could result in unexpected or new limitations on the Bancorp’s ability to pay dividends and engage in share
repurchases.
Deposit insurance premiums levied against the Bank could increase further if the number of bank failures increase or the cost of
resolving failed banks increases.
The FDIC maintains a Deposit Insurance Fund (“DIF”) to protect insured depositors in the event of bank failures. The DIF is funded by fees
assessed on insured depository institutions including the Bank. Future deposit premiums paid by the Bank depend on FDIC rules, which are
subject to change, the level of the DIF and the magnitude and cost of future bank failures. As of June 30, 2020, the DIF reserve ratio fell to
1.30%, below the statutory minimum of 1.35%. In order to restore the DIF to its statutorily mandated minimums, the FDIC significantly
increased deposit insurance premium rates, including the Bank’s, resulting in increased expenses. The revised assessment rate schedules
became effective January 1, 2023, and were applicable to the first quarterly assessment period of 2023. Additionally, in November 2023, the
FDIC issued a final rule for a special deposit insurance assessment to recover the costs associated with protecting uninsured depositors
following the bank failures that occurred in 2023. Subsequently, in 2024, the FDIC announced that it expects to incur additional losses related
to these bank failures beyond its initial estimates, resulting in an increase to the amount of the special assessment allocated to each member
bank. The Bancorp currently expects to pay the special assessment to the FDIC over a total of ten quarterly assessment periods, which began
with the first quarter of 2024. The FDIC may further increase the assessment rates or impose additional special assessments in the future,
which may require the Bank to pay significantly higher FDIC premiums.
If an orderly liquidation of a systemically important BHC or non-bank financial company were triggered, Fifth Third could face
assessments for the Orderly Liquidation Fund.
Dodd-Frank created authority for the orderly liquidation of systemically important BHCs and non-bank financial companies and is based on
the FDIC’s bank resolution model. The Secretary of the U.S. Treasury may trigger liquidation under this authority only after consultation
with the President of the United States and after receiving a recommendation from the board of the FDIC and the FRB upon a two-thirds vote.
Liquidation proceedings will be funded by the Orderly Liquidation Fund established under Dodd-Frank, which will borrow from the U.S.
Treasury and impose risk-based assessments on covered financial companies. Risk-based assessments would be made, first, on entities that
received more in the resolution than they would have received in the liquidation to the extent of such excess and second, if necessary, on,
among others, BHCs with total consolidated assets of $50 billion or more, such as Fifth Third. Any such assessments may adversely affect
Fifth Third’s business, financial condition or results of operations.
MARKET RISKS: INTEREST RATE RISKS AND PRICE RISKS
Weakness in the U.S. economy, including within Fifth Third’s geographic footprint, has adversely affected Fifth Third in the past and
may adversely affect Fifth Third in the future.
Fifth Third has been, and will continue to be, impacted by general business and economic conditions in the U.S. These conditions include
short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt
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and equity capital markets, broad trends in industry and finance, unemployment, tariffs or other anticipated changes in trade policy and other
social, economic and political impacts of the incoming administration and the strength of the U.S. economy and the local economies in which
Fifth Third operates, all of which are beyond Fifth Third’s control. Deterioration or continued weakness in any of these conditions could
result in a decrease in demand for Fifth Third’s products and services.
Global and domestic political, social and economic uncertainties and changes may adversely affect Fifth Third.
Global financial markets, including the U.S., face political and economic uncertainties (such as recent budget deficit concerns and political
conflict over legislation to raise the U.S. government’s debt limit) that may delay investment and hamper economic activity. International
events such as trade disputes, separatist movements, leadership changes and political and military conflicts (such as the ongoing military
tension between Russia and Ukraine and the conflict in Israel and Gaza) could adversely affect global financial activity and markets and
could negatively affect the U.S. economy. Worldwide financial markets have recently experienced periods of extraordinary disruption and
volatility, which have been driven by geopolitical events that have resulted in heightened credit risk, reduced valuation of investments,
decreased economic activity, heightened risk of cyber-attacks and inflation. Changes in trade policies by the U.S. or other countries, such as
tariffs or retaliatory tariffs, may cause inflation which could impact the prices of products sold by the Bancorp’s borrowers and have the
potential to reduce demand for their products impacting their profitability and making it difficult for its borrowers to repay their loans.
Moreover, many companies have experienced reduced liquidity and uncertainty as to their ability to raise capital during such periods of
market disruption and volatility. Additionally, in recent years, the FRB and other major central banks have removed or reduced monetary
accommodation and raised interest rates (although offset by recent rate reductions), increasing the risk of recession and may also negatively
impact asset values and credit spreads that were impacted by extraordinary monetary stimulus. These potential negative effects on financial
markets and economic activity could lead to reduced revenues, increased costs, increased credit risks and volatile markets, could adversely
impact Fifth Third’s ability to raise liquidity via money and capital markets and could negatively impact Fifth Third’s businesses, results of
operations and financial condition. In the event that these conditions recur or result in a prolonged economic downturn, Fifth Third’s results
of operations, financial position and/or liquidity could be materially and adversely affected. These market conditions may affect the
Bancorp’s ability to access debt and equity capital markets. In addition, as a result of recent financial and political events, Fifth Third may
face increased regulation.
Changes in interest rates could affect Fifth Third’s income and cash flows.
Fifth Third’s income and cash flows depend to a great extent on the difference between the interest rates earned on interest-earning assets
such as loans and investment securities and the interest rates paid on interest-bearing liabilities such as deposits and borrowings. These rates
are highly sensitive to many factors that are beyond Fifth Third’s control, including general economic conditions in the U.S. or abroad and the
policies of various governmental and regulatory agencies (in particular, the FRB). Changes in monetary policy, including changes in interest
rates and inflation, could influence the origination of loans, the prepayment speed of loans, the purchase of investments, the generation of
deposits and the rates received on loans and investment securities and paid on deposits or other sources of funding as well as customers’
ability to repay loans. For example, a tightening of the money supply by the FRB could reduce the demand for a borrower’s products and
services. This could adversely affect the borrower’s earnings and ability to repay a loan, which could have a material adverse effect on Fifth
Third’s financial condition and results of operations. The impact of these changes may be magnified if Fifth Third does not effectively
manage the relative sensitivity of its assets and liabilities to changes in market interest rates. Fluctuations in these areas may adversely affect
Fifth Third, its customers and its shareholders. Throughout 2022 and 2023, the Federal Reserve raised the federal funds rate to between
5.25% and 5.5% in an effort to curb inflation. Although the FRB reduced benchmark rates in the second half of 2024, they remain higher than
in previous years, and the inflationary outlook in the U.S. is currently uncertain. To the extent inflation increases and market interest rates
rise, the value of Fifth Third’s investment securities, particularly those that have fixed rates or longer maturities, could decrease. Persistent or
increasing inflation could lead to the FRB reversing recent reductions in interest rates. Increasing rates would also increase debt service
requirements for some of Fifth Third’s borrowers and may adversely affect those borrowers’ ability to pay as contractually obligated and
could result in additional delinquencies or charge-offs. Further, any increase in market interest rates is likely to reduce Fifth Third’s loan
origination volume, particularly refinance volume, and/or reduce its interest rate spread, which could have an adverse effect on Fifth Third’s
profitability and results of operations. Conversely, a lowering in interest rates would likely further reduce the interest Fifth Third earns on
loans and other earning assets. Fifth Third cannot predict the nature or timing of future changes in monetary policies or the precise effects that
they may have on Fifth Third’s activities and financial results.
Changes and trends in the capital markets may affect Fifth Third’s income and cash flows.
Fifth Third enters into and maintains trading and investment positions in the capital markets on its own behalf and manages investment
positions on behalf of its customers. These investment positions include derivative financial instruments. The revenues and profits Fifth Third
derives from managing proprietary and customer trading and investment positions are dependent on market prices. Market changes and trends
may result in a decline in wealth and asset management revenue or investment or trading losses that may impact Fifth Third. Losses on behalf
of its customers could expose Fifth Third to reputational issues, litigation, credit risks or loss of revenue from those clients and customers.
Additionally, losses in Fifth Third’s trading and investment positions could lead to a loss with respect to those investments and may adversely
affect Fifth Third’s income, cash flows and funding costs.
Fifth Third’s stock price is volatile.
Fifth Third’s stock price has been volatile in the past and several factors could cause the price to fluctuate substantially in the future. The
price for shares of Fifth Third’s common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to Fifth
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Third’s performance. General market price declines or market volatility in the future could adversely affect the price for shares of Fifth
Third’s common stock and the current market price of such shares may not be indicative of future market prices.
Fifth Third’s mortgage banking net revenue can be volatile from quarter to quarter.
Fifth Third earns revenue from the fees it receives for originating mortgage loans and for servicing mortgage loans. When rates rise, the
demand for mortgage loans tends to fall, reducing the revenue Fifth Third receives from loan originations. At the same time, revenue from
mortgage servicing rights (“MSRs”) can increase through increases in fair value. When rates fall, mortgage originations tend to increase and
the value of MSRs tends to decline, also with some offsetting revenue effect. Even though the origination of mortgage loans can act as a
“natural hedge,” the hedge is not perfect, either in amount or timing. For example, the negative effect on revenue from a decrease in the fair
value of residential MSRs is immediate, but any offsetting revenue benefit from more originations and the MSRs relating to the new loans
would accrue over time. It is also possible that even if interest rates were to fall, mortgage originations may also fall or any increase in
mortgage originations may not be enough to offset the decrease in the MSRs value caused by the lower rates.
Fifth Third typically uses derivatives and other instruments to hedge its mortgage banking interest rate and price risks. Fifth Third generally
does not hedge all of its risks and the fact that Fifth Third attempts to hedge any of the risks does not mean Fifth Third will be successful.
Hedging is a complex process, requiring sophisticated models and constant monitoring. Fifth Third may use hedging instruments tied to U.S.
Treasury rates, SOFR or other benchmarks that may not perfectly correlate with the value or income being hedged. Fifth Third could incur
significant losses from its hedging activities. There may be periods where Fifth Third elects not to use derivatives and other instruments to
hedge mortgage banking interest rate and price risks.
STRATEGIC RISKS
If Fifth Third does not respond to intense competition and rapid changes in the financial services industry or otherwise adapt to changing
customer preferences, its financial performance may suffer.
Fifth Third’s ability to deliver strong financial performance and returns on investment to shareholders will depend in part on its ability to
expand the scope of available financial services to meet the needs and demands of its customers. In addition to the challenge of competing
against other banks in attracting and retaining customers for traditional banking services, Fifth Third’s competitors also include securities
dealers, brokers, mortgage bankers, investment advisors and specialty finance, telecommunications, technology and insurance companies as
well as large retailers who seek to offer one-stop financial services in addition to other products and services desired by consumers that may
include services that banks have not been able or allowed to offer to their customers in the past or may not be currently able or allowed to
offer. Many of these other firms may be significantly larger than Fifth Third and may have access to customers and financial resources that
are beyond Fifth Third’s capability. Fifth Third competes with these firms with respect to capital, access to capital, revenue generation,
products, services, transaction execution, innovation, reputation, talent and price.
This increasingly competitive environment is primarily a result of changes in customer preferences, regulation, changes in technology and
product delivery systems, as well as the accelerating pace of consolidation among financial service providers. Rapidly changing technology
and consumer preferences may require Fifth Third to effectively implement new technology-driven products and services in order to compete
and meet customer demands. Fifth Third may not be able to do so or be successful in marketing these products and services to its customers.
As a result, Fifth Third’s ability to effectively compete to retain or acquire new business may be impaired, and its business, financial
condition or results of operations, may be adversely affected.
Fifth Third may make strategic investments and may expand an existing line of business or enter into new lines of business to remain
competitive. If Fifth Third’s chosen strategies are not appropriate to allow Fifth Third to effectively compete or Fifth Third does not execute
them in an appropriate or timely manner, Fifth Third’s business and results may suffer. Additionally, these strategies, products and lines of
business may bring with them unforeseeable or unforeseen risks and may not generate the expected results or returns, which could adversely
affect Fifth Third’s results of operations or future growth prospects and cause Fifth Third to fail to meet its stated goals and expectations.
Industry adoption of real-time payments networks could negatively impact financial performance through reductions in product
profitability, increased liquidity reserves and the potential for increased fraud losses, among other risks.
With the launch of real-time payments networks, such as RTP® from The Clearing House and FedNow® from the Federal Reserve,
instantaneous cash settlement capabilities are available 24 hours a day and 7 days a week. The implications of the new settlement capabilities
are far reaching and have not yet significantly affected the banking industry. As market adoption increases, Fifth Third may be required to
hold more liquidity reserves in cash to facilitate cash settlement activity outside of traditional business hours. Additionally, instantaneous
settlement will likely reduce float benefits associated with providing deposit and banking services, as well as pose incremental fraud risk due
to a reduced ability to reverse fraudulent transactions due to the speed of money movement.
Changes in retail distribution strategies and consumer behavior may adversely impact Fifth Third’s investments in its bank premises and
equipment and other assets and may lead to increased expenditures to change its retail distribution channel.
Fifth Third has significant investments in bank premises and equipment for its branch network including its 1,089 full-service banking centers
and 102 properties that are developed or in the process of being developed as branches, as well as its retail work force and other branch
banking assets. Advances in technology such as e-commerce, telephone, internet and mobile banking and in-branch self-service technologies
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including automatic teller machines and other equipment, as well as changing work arrangements and customer preferences for these other
methods of accessing Fifth Third’s products and services, could affect the value of Fifth Third’s branch network or other retail distribution
assets and may cause it to change its retail distribution strategy, close and/or sell certain branches or parcels of land held for development and
restructure or reduce its remaining branches and work force. Further advances in technology and/or changes in customer preferences could
have additional changes in Fifth Third’s retail distribution strategy and/or branch network. These actions could lead to losses on these assets
or could adversely impact the carrying value of other long-lived assets and may lead to increased expenditures to renovate and reconfigure
remaining branches or to otherwise reform its retail distribution channel.
Difficulties in identifying suitable opportunities or combining the operations of acquired entities or assets with Fifth Third’s own
operations or assessing the effectiveness of businesses in which Fifth Third makes strategic investments or with which Fifth Third enters
into strategic contractual relationships may prevent Fifth Third from achieving the expected benefits from these acquisitions, investments
or relationships.
Inherent uncertainties exist when assessing, acquiring or integrating the operations of another business or investment or relationship
opportunity. Fifth Third may not be able to fully achieve its strategic objectives and planned operating efficiencies relevant to an acquisition
or strategic relationship. In addition, the markets and industries in which Fifth Third and its potential acquisition and investment targets
operate are highly competitive. Acquisition or investment targets may lose customers or otherwise perform poorly or unprofitably, or in the
case of an acquired business or strategic relationship, cause Fifth Third to lose customers or perform poorly or unprofitably. Future
acquisition and investment activities and efforts to monitor newly acquired businesses or reap the benefits of a new strategic relationship may
require Fifth Third to devote substantial time and resources and may cause these acquisitions, investments and relationships to be unprofitable
or cause Fifth Third to be unable to pursue other business opportunities.
After completing an acquisition, Fifth Third may find that certain material information was not adequately disclosed during the due diligence
process or that certain items were not accounted for properly in accordance with financial accounting and reporting standards. Fifth Third
may also not realize the expected benefits of the acquisition due to lower financial results pertaining to the acquired entity or assets. For
example, Fifth Third could experience higher charge-offs than originally anticipated related to the acquired loan portfolio. Additionally,
acquired companies or businesses may increase Fifth Third’s risk of regulatory action or restrictions related to the operations of the acquired
business.
Future acquisitions may dilute current shareholders’ ownership of Fifth Third and may cause Fifth Third to become more susceptible to
adverse economic events.
Future business acquisitions could be material to Fifth Third and it may issue additional shares of stock to pay for those acquisitions, which
would dilute current shareholders’ ownership interests. Acquisitions also could require Fifth Third to use substantial cash or other liquid
assets or to incur debt. In those events, Fifth Third could become more susceptible to economic downturns, dislocations in capital markets
and competitive pressures.
Fifth Third may sell or consider selling one or more of its businesses or investments. Should it determine to sell such a business or
investment, it may not be able to generate gains on sale or related increases in shareholders’ equity commensurate with desirable levels.
Moreover, if Fifth Third sold such businesses or investments, the loss of income could have an adverse effect on its earnings and future
growth.
Fifth Third owns, or owns a minority stake in, as applicable, several businesses, investments and other assets that, in the future, may no
longer be aligned with Fifth Third’s strategic plans or regulatory expectations. If Fifth Third were to sell one or more of its businesses or
investments, it would be subject to market forces that may affect the timing or pricing of such sale or result in an unsuccessful sale. If Fifth
Third were to complete the sale of any of its businesses, investments and/or interests in third parties, it would lose the income from the sold
businesses and/or interests, including those accounted for under the equity method of accounting, and such loss of income could have an
adverse effect on its future earnings and growth. Additionally, Fifth Third may encounter difficulties in separating the operations of any
businesses it sells, which may affect its business or results of operations.
Fifth Third has businesses other than banking that are subject to a variety of risks.
Fifth Third is a diversified financial services company. As a result, the Bancorp is subject to additional risks and uncertainties. Other
businesses that the Bancorp operates include investment banking, securities underwriting and market making, investment management and
retail and institutional brokerage services offered through the Bancorp’s subsidiaries. These business activities are subject to rigorous
regulatory oversight by federal, state and self-regulatory entities, and may incur substantial market, operational, credit, regulatory, legal and
other risks that could adversely impact the Bancorp’s results of operations. For more information, refer to Regulation and Supervision—
Regulatory Regime for Derivatives in Item 1 of this Annual Report on Form 10-K.
REPUTATION RISKS
Damage to Fifth Third’s reputation could harm its business.
Fifth Third’s actual or alleged conduct in activities, such as certain sales and lending practices, data security, operational resiliency, corporate
governance and acquisitions, inappropriate behavior or misconduct of employees, failure to deliver minimum or required standards of service
or quality, association with particular customers, business partners, investments or vendors, as well as developments from any of the other
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risks described above, may result in negative public opinion at large (or with certain segments of the public) and may damage Fifth Third’s
reputation. Because Fifth Third conducts most of its businesses under the “Fifth Third” brand, negative public opinion about one business
could affect its other businesses. Actions taken by government regulators, shareholder activists and community organizations may also
damage Fifth Third’s reputation. Additionally, whereas negative public opinion once was primarily driven by adverse news coverage in
traditional media, the advent and expansion of social media facilitates the rapid dissemination of information or misinformation. Though Fifth
Third monitors social media channels, the potential remains for rapid and widespread dissemination of inaccurate, misleading or false
information or other negative information that could damage Fifth Third’s reputation. Negative public perception can adversely affect Fifth
Third’s ability to attract and keep customers and can increase the risk that it will be a target of litigation and regulatory action or experience
an accelerated deposits withdrawal event.
Fifth Third is subject to environmental, social and governance risks that could adversely affect its reputation, the trading price of its
common stock and/or its business, operations and earnings.
There is continued focus, including from governmental organizations, regulators, investors, customers and other stakeholders, on
environmental, social, governance and sustainability issues. Laws and regulations related to these issues continue to evolve. These laws and
regulations may impose additional compliance or disclosure obligations on us. Failure to adapt to or comply with regulatory requirements or
investor or stakeholder expectations and standards could negatively impact Fifth Third’s reputation, ability to do business with certain
partners, access to capital and its stock price. Organizations that provide information to investors and shareholders on corporate governance
and related matters have developed scores and ratings to evaluate companies on their approach to these matters, and unfavorable ratings of
Fifth Third may lead to negative investor sentiment and negative publicity in traditional and social media, including based on the identity of
those Fifth Third chooses to do business with and the public’s view of those customers.
While Fifth Third has sustainability and corporate responsibility initiatives, there can be no assurance that regulators, customers, investors
and employees will determine that these programs are sufficiently robust. Actual or perceived shortcomings with respect to these initiatives
and reporting can impact Fifth Third’s ability to hire and retain employees, increase its customer base or attract and retain certain types of
investors. Collecting, measuring, and reporting on this information and metrics can be costly, difficult and time consuming, is subject to
evolving reporting standards and can present numerous operational, reputational, financial, legal and other risks, any of which could have a
material impact, including on Fifth Third’s reputation and stock price. Inadequate processes to collect and review this information prior to
disclosure could be subject to potential liability related to such information.
Activists have historically targeted financial firms with public criticism for their relationships with clients that are engaged in certain
industries (such as those which are carbon intensive), including businesses whose products are or are perceived to be harmful to health, the
environment, the global climate or the social good. Activist criticism of Fifth Third’s relationships or due diligence practices with clients in
sensitive industries could potentially engender dissatisfaction among stakeholders with how Fifth Third addresses environmental or social
concerns through business activities or disclosures which could negatively affect its business or reputation.
Conversely, states throughout the Bank’s footprint have taken actions or proposed measures to limit the state’s ability to do business with
financial institutions or other businesses identified as discriminating against certain industries (such as those which are carbon intensive) or
practices based on environmental or social criteria. Additionally, other activist groups and state officials have in the past targeted firms with
public criticism and penalties for engaging in, or adhering to, certain environmental, social or governance practices or principles. Although
Fifth Third has a defined risk-based approach for client selection, Fifth Third could be inherently exposed to reputational, financial and legal
risk, and its ability to retain and attract customers and employees may be negatively impacted as a result of these contrasting arguments in
how a financial institution should address these issues.
GENERAL BUSINESS RISKS
Changes in accounting standards or interpretations could impact Fifth Third’s reported earnings and financial condition.
The accounting standard setters, including the FASB, the SEC and other regulatory agencies, periodically change the financial accounting and
reporting standards that govern the preparation of Fifth Third’s consolidated financial statements. These changes can be hard to predict and
can materially impact how Fifth Third records and reports its financial condition and results of operations. In some cases, Fifth Third could be
required to apply a new or revised standard retroactively, which would result in the recasting of Fifth Third’s prior period financial
statements.
Fifth Third uses models for business planning purposes that may not adequately predict future results.
Fifth Third uses financial models to aid in its planning for various purposes including its capital and liquidity needs and other purposes. The
models used may not accurately account for all variables, may fail to predict outcomes accurately and/or may overstate or understate certain
effects. As a result of these potential failures, Fifth Third may not adequately prepare for future events and may suffer losses or other setbacks
due to these failures.
Also, information Fifth Third provides to the public or to its regulators based on models could be inaccurate or misleading due to inadequate
design or implementation, for example. Decisions that its regulators make, including those related to capital distributions to its shareholders,
could be affected adversely due to the perception that the models used to generate the relevant information are unreliable or inadequate.
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Fifth Third’s framework for managing risks may not be effective in mitigating its risk and loss.
Fifth Third’s risk management framework seeks to mitigate risk and loss. Fifth Third has established processes and procedures intended to
identify, measure, monitor, report and manage the types of risk to which it is exposed, including liquidity risk, credit risk, interest rate risk,
price risk, legal and regulatory compliance risk, strategic risk, reputational risk and operational risk related to its employees, systems and
vendors, among others. Fifth Third also considers the physical and transition risks arising from climate change to be transverse risk drivers
that impact all of these material risks and has therefore integrated climate risk considerations into its risk management framework. Any
system of control and any system to reduce risk exposure, however well designed and operated, is based in part on certain assumptions and
can provide only reasonable, not absolute, assurances that the objectives of the system are met. A failure in Fifth Third’s internal controls
could have a significant negative impact not only on its earnings, but also on the perception that customers, regulators and investors may have
of Fifth Third. Fifth Third continues to devote a significant amount of effort, time and resources to improving its controls and ensuring
compliance with complex regulations, and overall safety and soundness.
Additionally, instruments, systems and strategies used to hedge or otherwise manage exposure to various types of interest rate, price, legal
and regulatory compliance, credit, liquidity, operational and business risks and enterprise-wide risk could be less effective than anticipated.
As a result, Fifth Third may not be able to effectively mitigate its risk exposures in particular market environments or against particular types
of risk. If Fifth Third’s risk management framework proves ineffective, Fifth Third could incur litigation costs, negative regulatory
consequences, reputational damages among other adverse consequences and Fifth Third could suffer unexpected losses that may affect its
financial condition or results of operations.
The preparation of financial statements requires Fifth Third to make subjective determinations and use estimates that may vary from
actual results and materially impact its results of operations or financial position.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make significant estimates that
affect the financial statements. If new information arises that results in a material change to a reserve amount, such a change could result in a
change to previously announced financial results. Refer to the Critical Accounting Policies section of Management’s Discussion and Analysis
of Financial Condition and Results of Operations for more information regarding management’s significant estimates.
Societal responses to climate change could adversely affect Fifth Third’s business and performance, including indirectly through impacts
on Fifth Third’s customers.
Concerns over the long-term impacts of climate change have led and may continue to lead to governmental efforts around the world to
mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns. Fifth Third and
its customers will need to respond to new laws and regulations, as well as consumer and business preferences resulting from climate change
concerns. Fifth Third and its customers may face cost increases, asset value reductions, operating process changes, and the like. The impact
on Fifth Third’s customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities
that may be negatively affected by economic transition towards a lower-carbon economy. Further, the effects of a disorderly transition may
vary from those of an orderly transition. Fifth Third could experience a drop in demand for its products and services, particularly in certain
sectors or geographies. In addition, Fifth Third could face reductions in creditworthiness on the part of some customers or in the value of
assets securing loans. Fifth Third’s efforts to take these risks into account in making lending and other decisions, including by increasing
business relationships with climate-resilient companies, may not be effective in protecting Fifth Third from the negative impact of new laws
and regulations or changes in consumer or business behavior.
Bank failures may create significant market volatility and regulatory uncertainty which could have a material adverse effect on Fifth
Third’s business and financial condition.
The U.S. government has adopted or proposed a variety of measures and new regulations, including modifications to liquidity, long-term debt
and capital requirements, enhancing existing stress testing frameworks, and may include additional special assessments to recover losses to
the DIF.
If enhanced levels of scrutiny and escalation from its regulators continues, it could negatively impact Fifth Third’s business activities as its
regulators perform reviews of, among other things, its liquidity, capital, stress testing and risk management programs and may require Fifth
Third to enhance its liquidity position and take other steps regarding risk management.
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38 Fifth Third Bancorp
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no SEC staff comments regarding the Bancorp’s periodic or current reports under the Exchange Act that are pending resolution.
ITEM 1C. CYBERSECURITY
The Bancorp recognizes the importance of maintaining a cybersecurity risk management system designed to reduce the risks that
cybersecurity threats pose to financial institutions. As such, the Bancorp has adopted proactive and defensive safeguards intended to better
protect the Bancorp’s information assets and supporting infrastructures from technology-related attacks. The Bancorp’s Board of Directors
and management oversee its information security and cybersecurity risk management programs. As further discussed below, the Bancorp has
established various programs, policies and procedures which are designed to proactively protect information assets. However, not all
incidents can be prevented. As a result, the Bancorp has also established various policies and procedures governing how to respond to
security incidents, with the objective of minimizing any potential impacts. As of December 31, 2024, the Bancorp is not aware of any
cybersecurity incidents that have materially affected or are reasonably likely to materially affect Fifth Third, including its business strategies,
results of operations or financial condition.
Risk Assessment and Management
The Bancorp maintains a variety of programs and policies to support the management of cybersecurity risk within the organization with a
focus on prevention, detection and response processes. These programs and policies leverage frameworks and controls from the National
Institute of Standards and Technology as well as various other regulatory requirements and industry-specific standards. The Bancorp also
participates in the federally recognized Financial Services Information Sharing and Analysis Center and requires its employees and
contractors to complete various education and training programs related to information security.
The Bancorp’s Information Technology (“IT”) and Information Security (“IS”) teams have the primary responsibility for establishing
appropriate policies and procedures that are responsive to cybersecurity threats and other information security risks. The Bancorp’s
Information Technology and Cybersecurity Risk Management (“IT CSRM”) team, as part of the Bancorp’s Risk Management division,
provides independent risk management oversight to those IT and IS teams. In addition to the Board oversight discussed below, the Bancorp’s
Internal Audit function independently oversees, reviews and validates these activities and reports to the Board of Directors on the
effectiveness of governance, risk management and internal controls.
The Bancorp has established an Enterprise Risk Management Framework which informs the Bancorp’s risk management programs. As part
of this framework, the IT CSRM team maintains the Bancorp’s IT CSRM Program, which is designed to identify, assess, manage, monitor
and report cybersecurity risks as part of the Bancorp’s independent risk management function. The IT CSRM team is responsible for defining
the risk management practices set forth in the IT CSRM Program. Refer to the Risk Management – Overview section of Item 7
(Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this Annual Report for additional information
on the Bancorp’s Enterprise Risk Management Framework and related risk management processes.
In light of the complexity and evolving nature of the cybersecurity landscape, the Bancorp periodically re-assesses the maturity of its
cybersecurity programs, policies and procedures, including in some instances by engaging the assistance of external experts. The Bancorp
also conducts exercises to test its incident response plans and threat assessments, some of which also involve assistance from external
consultants.
The Bancorp also maintains a Third Party Risk Management Program to perform similar functions related to risks associated with the
Bancorp’s relationships with third parties. This assists the Bancorp in its management of its relationships with third parties, which includes
considerations for identifying, analyzing and monitoring the cybersecurity risks that third parties may present to Fifth Third. The Bancorp
also maintains a third-party incident response program to govern its response in the event of third-party cybersecurity events.
Board of Directors Oversight
The Technology Committee of the Bancorp’s Board of Directors takes primary responsibility for overseeing the Bancorp’s information
security programs at the Board level. The Technology Committee’s primary purpose is to assist the Board of Directors in its oversight of
plans and operations related to information technology, cybersecurity, data privacy and third-party technology strategy.
The Bancorp’s Risk and Compliance Committee of the Board of Directors oversees the Bancorp’s Enterprise Risk Management Framework
and policies, including oversight of risks related to information security. The Risk and Compliance Committee receives periodic reports from
the Technology Committee and these committees meet jointly at least once per year to discuss the Company’s programs and risks.
The full Board of Directors receives reports from the Technology Committee and the Risk and Compliance Committee about the Bancorp’s
cybersecurity programs as a result of the above-described oversight. In the event of a material cybersecurity incident, the Bancorp’s incident
response procedures include notifications to the Technology Committee, Risk and Compliance Committee and full Board of Directors, when
appropriate and necessary.
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39 Fifth Third Bancorp
Management Oversight
The Bancorp’s Information Security Governance Committee (“ISGC”) is a management committee that reviews and discusses critical
information security risks that impact the Bancorp, identifies solutions to address these risks and has oversight of the Bancorp’s information
technology and information security policies. The ISGC provides cybersecurity reports periodically to the Risk and Compliance Committee
and is comprised of the Bancorp’s senior information security, information technology and enterprise risk management leaders, including the
Chief Information Security Officer (“CISO”), Chief Information Officer, Chief Technology & Information Security Officer, Chief Data
Officer and Chief Operational Risk Officer. The ISGC’s membership enables the ISGC to be informed about and monitor the prevention,
detection, mitigation and remediation of cybersecurity incidents, if any, in accordance with the Bancorp’s incident response plans.
The Bancorp’s CISO is responsible for information security policies and the coordination of information security efforts across the
organization. The CISO has over 35 years of diverse experience in information technology management and cybersecurity leadership at Fifth
Third and at other large, complex organizations. This prior experience includes leadership of functions for cybersecurity threat management,
intelligence, risk mitigation and incident response. The CISO has a Bachelor of Science degree in Computer and Information Science and is a
certified Six Sigma Black Belt. The Bancorp’s CISO reports to the Chief Technology & Information Security Officer. The CISO also reports
directly to the Technology Committee and participates in various management councils and committees. The Bancorp’s IT CSRM team
monitors that the CISO has appropriate authority to carry out the duties and responsibilities necessary of that position.
The CISO remains informed about developments in cybersecurity, including potential threats and emerging risk management techniques,
reporting such information to the Chief Information Officer and Technology Committee periodically. The CISO implements and oversees
processes for the regular monitoring of information systems. This includes the deployment of advanced security measures and system audits
to identify potential vulnerabilities. In the event of a cybersecurity incident, the CISO is equipped with a well-defined incident response plan.
This plan includes immediate actions designed to mitigate the impact of any incident, and long-term strategies for remediation and prevention
of future incidents.
ITEM 2. PROPERTIES
The Bancorp’s executive offices and the main office of the Bank are located on Fountain Square Plaza in downtown Cincinnati, Ohio in a 32-
story office tower and a five-story office building with an attached parking garage known as the Fifth Third Center and the William S. Rowe
Building, respectively. The Bancorp’s main operations campus is located in Cincinnati, Ohio, and is comprised of a three-story building with
an attached parking garage known as the George A. Schaefer, Jr. Operations Center, and a two-story building with surface parking known as
the Madisonville Office Building. The Bank owns 100% of these buildings.
At December 31, 2024, the Bancorp, through its banking and non-banking subsidiaries, operated 1,089 banking centers, of which 716 were
owned, 186 were leased and 187 were in owned buildings but on leased land. The banking centers are located in the states of Ohio, Florida,
Michigan, Illinois, Indiana, North Carolina, Kentucky, Tennessee, Georgia, South Carolina and West Virginia. The Bancorp’s significant
owned properties are owned free from mortgages and major encumbrances.
ITEM 3. LEGAL PROCEEDINGS
Refer to Note 19 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for information regarding legal
proceedings, which is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Table of Contents
40 Fifth Third Bancorp
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Officers are appointed annually by the Board of Directors at the meeting of Directors immediately following the Annual Meeting of
Shareholders. The names, ages and positions of the Executive Officers of the Bancorp as of February 24, 2025 are listed below along with
their business experience during the past five years:
Timothy N. Spence, 46. Chairman, Chief Executive Officer and President. Mr. Spence has been Chairman since January 2024, Chief
Executive Officer since July 2022 and President since October 2020. Previously, Mr. Spence was Executive Vice President and Head of
Consumer Bank, Payments, and Strategy of the Bancorp from August 2018 to October 2020, Head of Payments, Strategy and Digital
Solutions from 2017 to 2020, and Chief Strategy Officer of the Bancorp from September 2015 to October 2020. He also previously served as
a senior partner in the Financial Services practice at Oliver Wyman, a global strategy and risk management consulting firm, from 2006 to
2015.
Kristine R. Garrett, 66. Executive Vice President, Group Regional President and Head of Wealth & Asset Management since July 2022.
Ms. Garrett has been Executive Vice President and Head of Wealth & Asset Management since November 2020. Previously, she was Senior
Vice President and Head of Wealth & Asset Management from July 2019 to November 2020 and Head of Fifth Third Private Bank from
October 2017 until July 2019. Previously, she was President of Private Wealth in Chicago at CIBC U.S. from 2009 to 2017.
Kala J. Gibson, 53. Executive Vice President and Chief Corporate Responsibility Officer since February 2022. Mr. Gibson has been an
Executive Vice President of the Bancorp since June 2019. Previously, Mr. Gibson served as Head of Business Banking and Chief Enterprise
Corporate Responsibility Officer from December 2020 to February 2022, Head of Business Banking from September 2013 to December
2020, Senior Vice President from September 2011 to June 2019, and Business Banking Executive for Fifth Third’s East Michigan Region
from July 2011 to September 2013.
Kevin P. Lavender, 63. Executive Vice President and Head of Commercial Bank of the Bancorp since January 2020. Mr. Lavender has been
Executive Vice President of the Bank since 2016 and was the Head of Corporate Banking from 2016 to January 2020. Previously,
Mr. Lavender was Senior Vice President and Managing Director of Large Corporate and Specialized Lending from January 2009 to 2016 and
the Senior Vice President and Head of National Healthcare Lending from December 2005 to January 2009.
James C. Leonard, 55. Executive Vice President and Chief Operating Officer since January 2024. Mr. Leonard has been an Executive Vice
President of the Bancorp since September 2015. Previously, Mr. Leonard was Chief Financial Officer from November 2020 to December
2023, Chief Risk Officer from February 2020 to November 2020, Treasurer of the Bancorp from October 2013 to January 2020, Senior Vice
President from October 2013 to September 2015, the Director of Business Planning and Analysis from 2006 to 2013 and the Chief Financial
Officer of the Commercial Banking Division from 2001 to 2006.
Jeffrey A. Lopper, 51. Senior Vice President and Chief Accounting Officer since October 2024. Mr. Lopper has been a Senior Vice
President since 2012. Previously, he was Assistant Bancorp Controller from 2010 to 2024. Prior to that, since 2000, he has held various
positions within Fifth Third’s finance division.
Nancy C. Pinckney, 61. Executive Vice President and Chief Human Resources Officer since September 2021. Previously, Ms. Pinckney was
Senior Vice President and Director of Human Capital Business Consulting from February 2012 through September 2021 and Director of
Employee Relations from March 2010 to February 2012. Prior to that, she held various positions within Fifth Third’s human resources
division.
Bryan D. Preston, 48. Executive Vice President and Chief Financial Officer since January 2024. Mr. Preston has been an Executive Vice
President of the Bancorp since October 2022. Previously, Mr. Preston served as the Treasurer of the Bancorp from February 2020 to January
2024, Consumer Line of Business Chief Financial Officer from September 2017 to February 2020, Assistant Treasurer from March 2014 to
September 2017 and in various other roles in finance and accounting within Fifth Third from 2008 to 2014.
Jude A. Schramm, 52. Executive Vice President and Chief Information Officer since March 2018. Previously, Mr. Schramm served as Chief
Information Officer for GE Aviation and held various positions at GE beginning in 2001.
Robert P. Shaffer, 55. Executive Vice President and Chief Risk Officer since November 2020. Previously, Mr. Shaffer was Chief Human
Resources Officer from February 2017 to November 2020 and Chief Auditor from August 2007 to February 2017. He was named Executive
Vice President in 2010 and Senior Vice President in 2004. Prior to that, he held various positions within Fifth Third’s audit division.
Melissa S. Stevens, 50. Executive Vice President and Chief Marketing Officer since February 2023. Previously, Ms. Stevens was Chief
Digital Officer and Head of Digital, Marketing, Design and Innovation from November 2020 to February 2023. She also served as Senior
Vice President, Chief Digital Officer and Head of Omnichannel Banking Experiences, Design, and Innovation from May 2016 through
November 2020. Prior to joining Fifth Third, she served in several senior management positions at Citigroup, including Chief Operating
Officer and Managing Director of Citi FinTech from November 2015 through April 2016.
Table of Contents
41 Fifth Third Bancorp
Susan B. Zaunbrecher, 65. Executive Vice President, Chief Legal Officer and Corporate Secretary. Ms. Zaunbrecher has been Executive
Vice President and Chief Legal Officer since May 2018. Ms. Zaunbrecher has been Corporate Secretary since March 2023 and was
previously Corporate Secretary from May 2018 to November 2020. Prior to Fifth Third, Ms. Zaunbrecher was a partner at the law firm
Dinsmore and Shohl LLP, where she practiced for 28 years and served as the Chair of the Corporate Department and a member of the firm’s
board of directors and executive committee.
Table of Contents
42 Fifth Third Bancorp
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
The Bancorp’s common stock is traded in the over-the-counter market and is listed under the symbol “FITB” on the NASDAQ® Global
Select Market System.
See a discussion of dividend limitations that the subsidiaries can pay to the Bancorp discussed in Note 3 of the Notes to Consolidated
Financial Statements, which is incorporated herein by reference. Additionally, as of December 31, 2024, the Bancorp had 30,820 common
shareholders of record.
Issuer Purchases of Equity Securities
Period
Total Number
of Shares
Purchased(a)
Average Price Paid
Per Share
Total Number of Shares
Purchased as Part of Publicly
Announced Plans or
Programs
Maximum Number of
Shares that May Yet be
Purchased Under the Plans
or Programs(b)
October 1 - October 31, 2024
5,998,158
$
45.42
5,879,640
17,853,895
November 1 - November 30, 2024
29,699
47.06
—
17,853,895
December 1 - December 31, 2024
789,634
45.48
781,254
17,072,641
Total
6,817,491
$
45.44
6,660,894
17,072,641
(a)
Includes 156,597 shares repurchased during the fourth quarter of 2024 in connection with various employee compensation plans of the Bancorp. These purchases
do not count against the maximum number of shares that may yet be purchased under the Board of Directors’ authorization.
(b)
On June 18, 2019, the Bancorp announced that its Board of Directors had authorized management to purchase 100 million shares of the Bancorp’s common stock
through the open market or in any private party transactions. This authorization did not include specific targets or an expiration date.
See further discussion on share repurchase transactions and stock-based compensation in Note 24 and Note 25 of the Notes to Consolidated
Financial Statements, which is incorporated herein by reference.
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43 Fifth Third Bancorp
The following performance graphs do not constitute soliciting material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Bancorp specifically
incorporates the performance graphs by reference therein.
Total Return Analysis
The graphs below summarize the cumulative return experienced by the Bancorp’s shareholders over the five and ten year periods ended
December 31, 2024, respectively, compared to the S&P 500 Stock, the S&P Banks and the KBW Banks indices.
FIFTH THIRD BANCORP VS. MARKET INDICES
Total Return Index
5 Year Return
FITB
S&P 500 (SPX)
S&P Banks Index (BIX)
KBW Banks Index (BKX)
2019
2020
2021
2022
2023
2024
(20)%
0%
20%
40%
60%
80%
100%
120%
140%
Total Return Index
10 Year Return
FITB
S&P 500 (SPX)
S&P Banks Index (BIX)
KBW Bank Index (BKX)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
(50)%
0%
50%
100%
150%
200%
250%
300%
350%
400%
Table of Contents
44 Fifth Third Bancorp
2024 ANNUAL REPORT
FINANCIAL CONTENTS
Glossary of Abbreviations and Acronyms
46
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
47
Non-GAAP Financial Measures
51
Recent Accounting Standards
53
Critical Accounting Policies
53
Statements of Income Analysis
57
Business Segment Review
64
Balance Sheet Analysis
69
Risk Management - Overview
76
Credit Risk Management
77
Interest Rate and Price Risk Management
94
Liquidity Risk Management
100
Operational Risk Management
102
Legal and Regulatory Compliance Risk Management
103
Capital Management
104
Report of Independent Registered Public Accounting Firm
106
Financial Statements
Consolidated Balance Sheets
108
Consolidated Statements of Income
109
Consolidated Statements of Comprehensive Income
110
Consolidated Statements of Changes in Equity
111
Consolidated Statements of Cash Flows
112
Notes to Consolidated Financial Statements
Summary of Significant Accounting and Reporting Policies
113 Long-Term Debt
163
Supplemental Cash Flow Information
126 Commitments, Contingent Liabilities and Guarantees
167
Restrictions on Dividends and Capital Actions
126 Legal and Regulatory Proceedings
171
Investment Securities
127 Related Party Transactions
173
Loans and Leases
130 Income Taxes
174
Credit Quality and the Allowance for Loan and Lease Losses
132 Retirement and Benefit Plans
176
Bank Premises and Equipment
145 Accumulated Other Comprehensive Income
179
Operating Lease Equipment
145 Common, Preferred and Treasury Stock
181
Lease Obligations – Lessee
146 Stock-Based Compensation
183
Goodwill
147 Other Noninterest Income and Other Noninterest Expense
186
Intangible Assets
148 Earnings Per Share
186
Variable Interest Entities
149 Fair Value Measurements
187
Sales of Receivables and Servicing Rights
153 Regulatory Capital Requirements and Capital Ratios
195
Derivative Financial Instruments
155 Parent Company Financial Statements
196
Other Assets
161 Business Segments
198
Short-Term Borrowings
162 Subsequent Events
201
Management’s Assessment as to the Effectiveness of Internal
Control over Financial Reporting
202
Report of Independent Registered Public Accounting Firm
203
Consolidated Ten Year Comparison
211
Directors and Officers
212
Corporate Information
Table of Contents
45 Fifth Third Bancorp
Fifth Third Bancorp provides the following list of abbreviations and acronyms as a tool for the reader that are used in Management’s
Discussion and Analysis of Financial Condition and Results of Operations, the Consolidated Financial Statements and the Notes to
Consolidated Financial Statements.
ACL: Allowance for Credit Losses
GNMA: Government National Mortgage Association
AFS: Available-for-Sale
GSE: United States Government Sponsored Enterprise
ALCO: Asset Liability Management Committee
HTM: Held-To-Maturity
ALLL: Allowance for Loan and Lease Losses
IPO: Initial Public Offering
AOCI: Accumulated Other Comprehensive Income (Loss)
IRC: Internal Revenue Code
APR: Annual Percentage Rate
IRLC: Interest Rate Lock Commitment
ARM: Adjustable Rate Mortgage
ISDA: International Swaps and Derivatives Association, Inc.
ASC: Accounting Standards Codification
LIBOR: London Interbank Offered Rate
ASU: Accounting Standards Update
LIHTC: Low-Income Housing Tax Credit
ATM: Automated Teller Machine
LLC: Limited Liability Company
BHC: Bank Holding Company
LTV: Loan-to-Value Ratio
BOLI: Bank Owned Life Insurance
MD&A: Management’s Discussion and Analysis of Financial
bps: Basis Points
Condition and Results of Operations
CD: Certificate of Deposit
MSR: Mortgage Servicing Right
CDC: Fifth Third Community Development Corporation and Fifth Third N/A: Not Applicable
Community Development Company, LLC
NII: Net Interest Income
CECL: Current Expected Credit Loss
NM: Not Meaningful
CET1: Common Equity Tier 1
OAS: Option-Adjusted Spread
CFPB: United States Consumer Financial Protection Bureau
OCC: Office of the Comptroller of the Currency
CME: Chicago Mercantile Exchange
OCI: Other Comprehensive Income (Loss)
C&I: Commercial and Industrial
OREO: Other Real Estate Owned
DCF: Discounted Cash Flow
PSA: Performance Share Award
DTCC: Depository Trust & Clearing Corporation
RCC: Risk and Compliance Committee
ERM: Enterprise Risk Management
ROU: Right-of-Use
ERMC: Enterprise Risk Management Committee
RSA: Restricted Stock Award
EVE: Economic Value of Equity
RSU: Restricted Stock Unit
FASB: Financial Accounting Standards Board
SAR: Stock Appreciation Right
FDIC: Federal Deposit Insurance Corporation
SBA: Small Business Administration
FHA: Federal Housing Administration
SEC: United States Securities and Exchange Commission
FHLB: Federal Home Loan Bank
SOFR: Secured Overnight Financing Rate
FHLMC: Federal Home Loan Mortgage Corporation
TBA: To Be Announced
FICO: Fair Isaac Corporation (credit rating)
TILA: Truth in Lending Act
FINRA: Financial Industry Regulatory Authority
TRA: Tax Receivable Agreement
FNMA: Federal National Mortgage Association
TruPS: Trust Preferred Securities
FOMC: Federal Open Market Committee
U.S.: United States of America
FRB: Federal Reserve Bank
U.S. GAAP: United States Generally Accepted Accounting
FTE: Fully Taxable Equivalent
Principles
FTP: Funds Transfer Pricing
VA: United States Department of Veterans Affairs
FTS: Fifth Third Securities, Inc.
VIE: Variable Interest Entity
GDP: Gross Domestic Product
VRDN: Variable Rate Demand Note
Table of Contents
GLOSSARY OF ABBREVIATIONS AND ACRONYMS
46 Fifth Third Bancorp
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is Management’s Discussion and Analysis of Financial Condition and Results of Operations of certain significant factors that
have affected Fifth Third Bancorp’s (the “Bancorp” or “Fifth Third”) financial condition and results of operations during the periods included
in the Consolidated Financial Statements, which are a part of this filing. Reference to the Bancorp incorporates the parent holding company
and all consolidated subsidiaries. The Bancorp’s banking subsidiary is referred to as the Bank.
OVERVIEW
This overview of MD&A highlights selected information in the financial results of the Bancorp and may not contain all of the information
that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources and
critical accounting policies and estimates, you should carefully read this entire document. Each of these items could have an impact on the
Bancorp’s financial condition, results of operations and cash flows. In addition, refer to the Glossary of Abbreviations and Acronyms in this
report for a list of terms included as a tool for the reader of this Annual Report on Form 10-K. The abbreviations and acronyms identified
therein are used throughout this MD&A, as well as the Consolidated Financial Statements and Notes to Consolidated Financial Statements.
Net interest income, net interest margin, net interest rate spread and the efficiency ratio are presented in MD&A on an FTE basis. The FTE
basis adjusts for the tax-favored status of income from certain loans and leases and securities held by the Bancorp that are not taxable for
federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income as it
provides a relevant comparison between taxable and non-taxable amounts. The FTE basis for presenting net interest income is a non-GAAP
measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
The Bancorp’s revenues are dependent on both net interest income and noninterest income. For the year ended December 31, 2024, net
interest income on an FTE basis and noninterest income provided 66% and 34% of total revenue, respectively. The Bancorp derives the
majority of its revenues within the U.S. from customers domiciled in the U.S. Changes in interest rates, credit quality, economic trends and
the capital markets are primary factors that drive the performance of the Bancorp. As discussed later in the Risk Management section of
MD&A, risk identification, measurement, monitoring, control and reporting are important to the management of risk and to the financial
performance and capital strength of the Bancorp.
Net interest income is the difference between interest income earned on assets such as loans, leases and securities, and interest expense
incurred on liabilities such as deposits, other short-term borrowings and long-term debt. Net interest income is affected by the general level of
interest rates, the relative level of short-term and long-term interest rates, changes in interest rates and changes in the amount and composition
of interest-earning assets and interest-bearing liabilities. Generally, the rates of interest the Bancorp earns on its assets and pays on its
liabilities are established for a period of time. The change in market interest rates over time exposes the Bancorp to interest rate risk through
potential adverse changes to net interest income and financial position. The Bancorp manages this risk by continually analyzing and adjusting
the composition of its assets and liabilities based on their payment streams and interest rates, the timing of their maturities and their
sensitivity to changes in market interest rates. Additionally, in the ordinary course of business, the Bancorp enters into certain derivative
transactions as part of its overall strategy to manage its interest rate and prepayment risks. The Bancorp is also exposed to the risk of loss on
its loan and lease portfolio as a result of changing expected cash flows caused by borrower credit events, such as loan defaults and inadequate
collateral.
Noninterest income is derived from wealth and asset management revenue, commercial payments revenue, consumer banking revenue,
capital markets fees, commercial banking revenue, mortgage banking net revenue, other noninterest income and net securities gains or losses.
Noninterest expense includes compensation and benefits, technology and communications, net occupancy expense, equipment expense, loan
and lease expense, marketing expense, card and processing expense and other noninterest expense.
FDIC Special Assessment
In response to the bank failures that occurred in the first half of 2023, the FDIC issued a final rule for a special deposit insurance assessment
on banking organizations with greater than $5 billion in assets to recover the losses to the Deposit Insurance Fund associated with protecting
uninsured depositors. As of December 31, 2024, the Bancorp’s estimate of its allocation of the special assessment was $252 million, based on
the most recent information provided by the FDIC. As a result of this special assessment, the Bancorp recorded expense of $28 million and
$224 million during the years ended December 31, 2024 and 2023, respectively, related to this estimate. The Bancorp currently expects to pay
the special assessment to the FDIC over a total of ten quarterly assessment periods, which began with the first quarter of 2024. The estimate
of the cost associated with protecting the uninsured depositors will continue to be subject to periodic adjustment until the final loss amount is
determined by the FDIC.
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
47 Fifth Third Bancorp
Accelerated Share Repurchase Transactions
During the year ended December 31, 2024, the Bancorp entered into and settled accelerated share repurchase transactions totaling $625
million. Refer to Note 24 of the Notes to Consolidated Financial Statements for additional information on share repurchase activity.
Senior Notes Offerings
On January 29, 2024, the Bancorp issued and sold $1.0 billion of fixed-rate/floating-rate senior notes which will mature on January 29, 2032.
The senior notes will bear interest at a rate of 5.631% per annum until January 28, 2031. From January 29, 2031 until maturity, the senior
notes will bear interest at a rate of compounded SOFR plus 1.840%.
On September 6, 2024, the Bancorp issued and sold $750 million of fixed-rate/floating-rate senior notes which will mature on September 6,
2030. The senior notes will bear interest at a rate of 4.895% per annum until September 5, 2029. From September 6, 2029 until maturity, the
senior notes will bear interest at a rate of compounded SOFR plus 1.486%.
Refer to Note 17 of the Notes to Consolidated Financial Statements for more information.
Transfer of Securities
In January 2024, the Bancorp transferred $12.6 billion (amortized cost basis) of securities from available-for-sale to held-to-maturity to
reflect the Bancorp’s change in intent to hold these securities to maturity in order to reduce potential capital volatility associated with
investment security market price fluctuations. The transfer included U.S. Treasury and federal agencies securities, agency residential
mortgage-backed securities and agency commercial mortgage-backed securities. Refer to the Investment Securities subsection of the Balance
Sheet Analysis section of MD&A for more information.
CFPB Settlements
On July 9, 2024, the Bank and the CFPB agreed to resolve previously outstanding litigation which alleged violations of the Consumer
Financial Protection Act, the Truth in Lending Act and Truth in Savings Act. The Bank agreed to the entry of a Stipulated Final Judgment
and Order, pursuant to which the Bank, without admitting or denying any of the allegations in the suit except as specified in the order, agreed
to pay a civil monetary penalty of $15 million, agreed to maintain existing policies around its consumer sales incentives, agreed to create a
compliance plan to ensure its account opening practices comply with law and the order and agreed to provide a redress plan to remediate
certain customers with checking, savings, or credit card accounts opened beginning January 1, 2010 and ending December 31, 2016.
Concurrently, the Bank also agreed to entry of a Consent Order related to a since-discontinued program in its auto lending business that
placed collateral protection insurance on certain automobile loans. Under this Consent Order, without admitting or denying any of the
findings of fact or conclusions of law (except to establish jurisdiction), the Bank agreed to pay a $5 million civil monetary penalty related to
those issues, maintain existing policy changes related to its auto servicing practices, agreed to create a compliance plan to ensure its
compliance with the order and provide a redress plan to remediate certain customers within a redress period beginning July 21, 2011 and
ending December 31, 2020.
Refer to Note 19 of the Notes to Consolidated Financial Statements for additional information on these settlements.
Key Performance Indicators
The Bancorp, as a banking institution, utilizes various key indicators of financial condition and operating results in managing and monitoring
the performance of the business. In addition to traditional financial metrics, such as revenue and expense trends, the Bancorp monitors other
financial measures that assist in evaluating growth trends, capital strength and operational efficiencies. The Bancorp analyzes these key
performance indicators against its past performance, its forecasted performance and with the performance of its peer banking institutions.
These indicators may change from time to time as the operating environment and businesses change.
The following are some of the key indicators used by management to assess the Bancorp’s business performance, including those which are
considered in the Bancorp’s compensation programs:
•
CET1 Capital Ratio: CET1 capital divided by risk-weighted assets as defined by the Basel III standardized approach to risk-
weighting of assets
•
Return on Average Tangible Common Equity (non-GAAP): Tangible net income available to common shareholders divided by
average tangible common equity
•
Return on Average Common Equity, Excluding AOCI (non-GAAP): Net income available to common shareholders divided by total
equity, excluding AOCI and preferred stock
•
Net Interest Margin (non-GAAP): Net interest income on an FTE basis divided by average interest-earning assets
•
Efficiency Ratio (non-GAAP): Noninterest expense divided by the sum of net interest income on an FTE basis and noninterest
income
•
Earnings Per Share, Diluted: Net income allocated to common shareholders divided by average common shares outstanding after the
effect of dilutive stock-based awards
•
Nonperforming Portfolio Assets Ratio: Nonperforming portfolio assets divided by portfolio loans and leases and OREO
•
Net Charge-off Ratio: Net losses charged-off divided by average portfolio loans and leases
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
48 Fifth Third Bancorp
•
Return on Average Assets: Net income divided by average assets
•
Loan-to-Deposit Ratio: Total loans divided by total deposits
•
Household Growth: Change in the number of consumer households with retail relationship-based checking accounts
The list of indicators above is intended to summarize some of the most important metrics utilized by management in evaluating the Bancorp’s
performance and does not represent an all-inclusive list of all performance measures that may be considered relevant or important to
management or investors.
TABLE 1: Earnings Summary
For the years ended December 31 ($ in millions, except per share data)
2024
2023
2022
Income Statement Data
Net interest income (U.S. GAAP)
$
5,630
5,827
5,609
Net interest income (FTE)(a)(b)
5,654
5,852
5,625
Noninterest income
2,849
2,881
2,766
Total revenue (FTE)(a)(b)
8,503
8,733
8,391
Provision for credit losses
530
515
563
Noninterest expense
5,033
5,205
4,719
Net income
2,314
2,349
2,446
Net income available to common shareholders
2,155
2,212
2,330
Common Share Data
Earnings per share - basic
$
3.16
3.23
3.38
Earnings per share - diluted
3.14
3.22
3.35
Cash dividends declared per common share
1.44
1.36
1.26
Book value per share
26.17
25.04
22.26
Market value per share
42.28
34.49
32.81
Financial Ratios
Return on average assets
1.09 %
1.13
1.18
Return on average common equity
12.5
14.2
13.7
Return on average tangible common equity(b)
17.8
21.3
19.7
Dividend payout
45.6
42.1
37.3
(a)
Amounts presented on an FTE basis. The FTE adjustments were $24, $25 and $16 for the years ended December 31, 2024, 2023 and 2022, respectively.
(b)
These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
Earnings Summary
The Bancorp’s net income available to common shareholders for the year ended December 31, 2024 was $2.2 billion, or $3.14 per diluted
share, which was net of $159 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the year
ended December 31, 2023 was $2.2 billion, or $3.22 per diluted share, which was net of $137 million in preferred stock dividends.
Net interest income on an FTE basis (non-GAAP) was $5.7 billion for the year ended December 31, 2024, decreasing $198 million compared
to the prior year. Net interest income was negatively impacted by higher funding costs due to increases in market interest rates and deposit
balance migration into higher yielding products as well as a decrease in the average balances of commercial and industrial loans for the year
ended December 31, 2024. These negative impacts were partially offset by higher yields on average interest-earning assets and an increase in
the average balances of other short-term investments. Net interest margin on an FTE basis (non-GAAP) was 2.90% for the year ended
December 31, 2024 compared to 3.05% for the year ended December 31, 2023.
The provision for credit losses was $530 million for the year ended December 31, 2024 compared to $515 million in the prior year. Provision
expense for the year ended December 31, 2024 was affected by the impacts of deterioration in the macroeconomic forecast for the
commercial portfolio, higher period-end loan and lease balances and increases in specific reserves on individually evaluated commercial
loans, partially offset by the impacts of changes in consumer loan portfolio mix, improvement in the macroeconomic forecast for the
consumer loan portfolio and improvements in probability of default ratings on commercial loans. Net losses charged off as a percent of
average portfolio loans and leases were 0.45% and 0.32% for the years ended December 31, 2024 and 2023, respectively. At December 31,
2024, nonperforming portfolio assets as a percent of portfolio loans and leases and OREO increased to 0.71% compared to 0.59% at
December 31, 2023. For further discussion on credit quality, refer to the Credit Risk Management subsection of the Risk Management section
of MD&A as well as Note 6 of the Notes to Consolidated Financial Statements.
Noninterest income decreased $32 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily
due to decreases in other noninterest income, mortgage banking net revenue and commercial banking revenue, partially offset by increases in
wealth and asset management revenue and commercial payments revenue.
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49 Fifth Third Bancorp
Noninterest expense decreased $172 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily
due to decreases in other noninterest expense and marketing expense, partially offset by increases in compensation and benefits expense,
technology and communications expense and net occupancy expense.
For more information on net interest income, provision for credit losses, noninterest income and noninterest expense, refer to the Statements
of Income Analysis section of MD&A.
Capital Summary
The Bancorp calculated its regulatory capital ratios under the Basel III standardized approach to risk-weighting of assets and pursuant to the
five-year transition provision option to phase in the effects of CECL on regulatory capital as of December 31, 2024. As of December 31,
2024, the Bancorp’s capital ratios, as defined by the U.S. banking agencies, were:
•
CET1 capital ratio: 10.57%;
•
Tier 1 risk-based capital ratio: 11.86%;
•
Total risk-based capital ratio: 13.86%;
•
Leverage ratio: 9.22%
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50 Fifth Third Bancorp
NON-GAAP FINANCIAL MEASURES
The following are non-GAAP financial measures which provide useful insight to the reader of the Consolidated Financial Statements but
should be supplemental to primary U.S. GAAP measures and should not be read in isolation or relied upon as a substitute for the primary
U.S. GAAP measures. The Bancorp encourages readers to consider the Consolidated Financial Statements in their entirety and not to rely on
any single financial measure.
The FTE basis adjusts for the tax-favored status of income from certain loans and leases and securities held by the Bancorp that are not
taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest
income as it provides a relevant comparison between taxable and non-taxable amounts.
The following table reconciles the non-GAAP financial measures of net interest income on an FTE basis, interest income on an FTE basis,
net interest margin, net interest rate spread and the efficiency ratio to U.S. GAAP:
TABLE 2: Non-GAAP Financial Measures - Financial Measures and Ratios on an FTE basis
For the years ended December 31 ($ in millions)
2024
2023
2022
Net interest income (U.S. GAAP)
$
5,630
5,827
5,609
Add: FTE adjustment
24
25
16
Net interest income on an FTE basis (1)
$
5,654
5,852
5,625
Interest income (U.S. GAAP)
$
10,426
9,760
6,587
Add: FTE adjustment
24
25
16
Interest income on an FTE basis (2)
$
10,450
9,785
6,603
Interest expense (3)
$
4,796
3,933
978
Noninterest income (4)
2,849
2,881
2,766
Noninterest expense (5)
5,033
5,205
4,719
Average interest-earning assets (6)
194,800
191,743
186,326
Average interest-bearing liabilities (7)
146,188
137,592
119,624
Ratios:
Net interest margin on an FTE basis (1) / (6)
2.90 %
3.05
3.02
Net interest rate spread on an FTE basis ((2) / (6)) - ((3) / (7))
2.08
2.24
2.72
Efficiency ratio on an FTE basis (5) / ((1) + (4))
59.2
59.6
56.2
The Bancorp believes return on average tangible common equity is an important measure for comparative purposes with other financial
institutions, but is not defined under U.S. GAAP, and therefore is considered a non-GAAP financial measure. This measure is useful for
evaluating the performance of a business as it calculates the return available to common shareholders without the impact of intangible assets
and their related amortization.
The following table reconciles the non-GAAP financial measure of return on average tangible common equity to U.S. GAAP:
TABLE 3: Non-GAAP Financial Measures - Return on Average Tangible Common Equity
For the years ended December 31 ($ in millions)
2024
2023
2022
Net income available to common shareholders (U.S. GAAP)
$
2,155
2,212
2,330
Add: Intangible amortization, net of tax
28
34
37
Tangible net income available to common shareholders (1)
$
2,183
2,246
2,367
Average Bancorp shareholders’ equity (U.S. GAAP)
$
19,398
17,704
19,080
Less: Average preferred stock
2,116
2,116
2,116
Average goodwill
4,918
4,918
4,779
Average intangible assets
107
146
168
Average tangible common equity (2)
$
12,257
10,524
12,017
Return on average tangible common equity (1) / (2)
17.8 %
21.3
19.7
The Bancorp considers various measures when evaluating capital utilization and adequacy, including the tangible equity ratio and tangible
common equity ratio, in addition to capital ratios defined by the U.S. banking agencies. These calculations are intended to complement the
capital ratios defined by the U.S. banking agencies for both absolute and comparative purposes. As U.S. GAAP does not include capital ratio
measures, the Bancorp believes there are no comparable U.S. GAAP financial measures to these ratios. These ratios are not formally defined
by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to be non-GAAP financial measures.
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51 Fifth Third Bancorp
The following table reconciles non-GAAP capital ratios to U.S. GAAP:
TABLE 4: Non-GAAP Financial Measures - Capital Ratios
As of December 31 ($ in millions)
2024
2023
Total Bancorp Shareholders’ Equity (U.S. GAAP)
$
19,645
19,172
Less: Preferred stock
2,116
2,116
Goodwill
4,918
4,919
Intangible assets
90
125
AOCI
(4,636)
(4,487)
Tangible common equity, excluding AOCI (1)
17,157
16,499
Add: Preferred stock
2,116
2,116
Tangible equity (2)
$
19,273
18,615
Total Assets (U.S. GAAP)
$
212,927
214,574
Less: Goodwill
4,918
4,919
Intangible assets
90
125
AOCI, before tax
(5,868)
(5,680)
Tangible assets, excluding AOCI (3)
$
213,787
215,210
Ratios:
Tangible equity as a percentage of tangible assets (2) / (3)
9.02 %
8.65
Tangible common equity as a percentage of tangible assets (1) / (3)
8.03
7.67
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52 Fifth Third Bancorp
RECENT ACCOUNTING STANDARDS
Note 1 of the Notes to Consolidated Financial Statements provides a discussion of the significant new accounting standards applicable to the
Bancorp during 2024 and the expected impact of significant accounting standards issued, but not yet required to be adopted.
CRITICAL ACCOUNTING POLICIES
The Bancorp’s Consolidated Financial Statements are prepared in accordance with U.S. GAAP. Certain accounting policies require
management to exercise judgment in determining methodologies, economic assumptions and estimates that may materially affect the
Bancorp’s financial position, results of operations and cash flows. The Bancorp’s critical accounting policies include the accounting for the
ALLL, reserve for unfunded commitments, valuation of servicing rights, goodwill, legal contingencies and fair value measurements. There
have been no material changes to the valuation techniques or models described below during the year ended December 31, 2024.
ALLL
The Bancorp disaggregates its portfolio loans and leases into portfolio segments for purposes of determining the ALLL. The Bancorp’s
portfolio segments include commercial, residential mortgage and consumer. The Bancorp further disaggregates its portfolio segments into
classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. For an analysis of the Bancorp’s ALLL
by portfolio segment and credit quality information by class, refer to Note 6 of the Notes to Consolidated Financial Statements.
The Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred over the remaining contractual terms
of the related loans and leases. Contractual terms are adjusted for expected prepayments but are not extended for expected extensions,
renewals or modifications except in circumstances where extension or renewal options are embedded in the original contract and not
unconditionally cancellable by the Bancorp. Accrued interest receivable on loans is presented in the Consolidated Financial Statements as a
component of other assets. When accrued interest is deemed to be uncollectible (typically when a loan is placed on nonaccrual status), interest
income is reversed. The Bancorp follows established policies for placing loans on nonaccrual status, so uncollectible accrued interest
receivable is reversed in a timely manner. As a result, the Bancorp has elected not to measure a reserve for accrued interest receivable as part
of its ALLL. However, the Bancorp does record a reserve for the portion of accrued interest receivable that it expects to be uncollectible. For
additional information on the Bancorp’s accounting policies related to nonaccrual loans and leases, refer to Note 1 of the Notes to
Consolidated Financial Statements.
Credit losses are charged and recoveries are credited to the ALLL. The ALLL is maintained at a level the Bancorp considers to be adequate
and is based on ongoing quarterly assessments and evaluations of the collectability of loans and leases, including historical credit loss
experience, current and forecasted market and economic conditions and consideration of various qualitative factors that, in management’s
judgment, deserve consideration in estimating expected credit losses. Provisions for credit losses are recorded for the amounts necessary to
adjust the ALLL to the Bancorp’s current estimate of expected credit losses on portfolio loans and leases. The Bancorp’s strategy for credit
risk management includes a combination of conservative exposure limits significantly below legal lending limits and conservative
underwriting, documentation and collections standards. The strategy also emphasizes diversification on a geographic, industry and customer
level, regular credit examinations and quarterly management reviews of large credit exposures and loans experiencing deterioration of credit
quality. Refer to the Credit Risk Management subsection of the Risk Management section of MD&A for additional information.
The Bancorp’s methodology for determining the ALLL requires significant management judgment and includes an estimate of expected
credit losses on a collective basis for groups of loans and leases with similar risk characteristics and specific allowances for loans and leases
which are individually evaluated.
Larger commercial loans and leases included within aggregate borrower relationship balances exceeding $1 million on nonaccrual status are
individually evaluated for an ALLL. The Bancorp considers the current value of collateral, credit quality of any guarantees, the guarantor’s
liquidity and willingness to cooperate, the loan or lease structure (including modifications, if any) and other factors when determining the
amount of the ALLL. Other factors may include the borrower’s susceptibility to risks presented by the forecasted macroeconomic
environment, the industry and geographic region of the borrower, size and financial condition of the borrower, cash flow and leverage of the
borrower and the Bancorp’s evaluation of the borrower’s management. Significant management judgment is required when evaluating which
of these factors are most relevant in individual circumstances, and when estimating the amount of expected credit losses based on those
factors. When loans and leases are individually evaluated, allowances are determined based on management’s estimate of the borrower’s
ability to repay the loan or lease given the availability of collateral and other sources of cash flow, as well as an evaluation of legal options
available to the Bancorp. Allowances for individually evaluated loans and leases that are collateral-dependent are measured based on the fair
value of the underlying collateral, less expected costs to sell where applicable. Allowances for individually evaluated loans and leases that are
not collateral-dependent are typically measured based on the present value of expected cash flows of the loan or lease, discounted at its
effective interest rate. Specific allowances on individually evaluated commercial loans and leases are reviewed quarterly and adjusted as
necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.
The Bancorp considers loans to be collateral-dependent when it becomes probable that repayment of the loan will be provided through the
sale or operation of the collateral instead of from payments made by the borrower. The expected credit losses for these loans are typically
estimated based on the fair value of the underlying collateral, less expected costs to sell where applicable. Specific allowances on individually
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53 Fifth Third Bancorp
evaluated consumer and residential mortgage loans are reviewed quarterly and adjusted as necessary based on changing borrower and/or
collateral conditions and actual collection and charge-off experience.
Expected credit losses are estimated on a collective basis for loans and leases that are not individually evaluated. For collectively evaluated
loans and leases, the Bancorp uses models to forecast expected credit losses based on the probability of a loan or lease defaulting, the
expected balance at the estimated date of default and the expected loss percentage given a default. The estimate of the expected balance at the
time of default considers prepayments and, for loans with available credit, expected utilization rates. The Bancorp’s expected credit loss
models were developed based on historical credit loss experience and observations of migration patterns for various credit risk characteristics
(such as internal credit risk ratings, external credit ratings or scores, delinquency status, loan-to-value trends, etc.) over time, with those
observations evaluated in the context of concurrent macroeconomic conditions. The Bancorp developed its models from historical
observations capturing a full economic cycle when possible.
The Bancorp’s expected credit loss models consider historical credit loss experience, current market and economic conditions, and forecasted
changes in market and economic conditions if such forecasts are considered reasonable and supportable. Generally, the Bancorp considers its
forecasts to be reasonable and supportable for a period of up to three years from the estimation date. For periods beyond the reasonable and
supportable forecast period, expected credit losses are estimated by reverting to historical loss information without adjustment for changes in
economic conditions. This reversion is phased in over a two-year period. The Bancorp evaluates the length of its reasonable and supportable
forecast period, its reversion period and reversion methodology at least annually, or more often if warranted by economic conditions or other
circumstances.
The Bancorp also considers qualitative factors in determining the ALLL in order to capture characteristics in the portfolio that impact
expected credit loss models but are not fully captured within the Bancorp’s expected credit loss models. These considerations inherently
require significant management judgment to determine the appropriate factors to be considered and the extent of their impact on the ALLL
estimate. These may include adjustments for changes in policies or procedures in underwriting, monitoring or collections, lending and risk
management personnel and results of internal audit and quality control reviews. These may also include adjustments, when deemed
necessary, for specific idiosyncratic risks such as geopolitical events, natural disasters and their effects on regional borrowers, changes in
product structures or changes in economic conditions that are not reflected in the quantitative credit loss models. Qualitative factor
adjustments may also be used to address the impacts of unforeseen events on key inputs and assumptions within the Bancorp’s expected
credit loss models, such as the reasonable and supportable forecast period, changes to historical loss information or changes to the reversion
period or methodology. When evaluating the adequacy of allowances, consideration is also given to regional geographic concentrations and
the closely associated effect that changing economic conditions may have on the Bancorp’s customers. Given the diverse circumstances that
necessitate the application of qualitative factors, the specific factors considered and their relative significance to the ALLL vary from period
to period.
Overall, the collective evaluation process requires significant management judgment when determining the estimation methodology and
inputs into the models, as well as in evaluating the reasonableness of the modeled results and the appropriateness of qualitative adjustments.
The Bancorp’s forecasts of market and economic conditions and the internal risk ratings assigned to loans and leases in the commercial
portfolio segment are examples of inputs to the expected credit loss models that require significant management judgment. These inputs have
the potential to drive significant variability in the resulting ALLL.
Refer to the Allowance for Credit Losses subsection of the Risk Management section of MD&A for a discussion on the Bancorp’s ALLL
sensitivity analysis.
Reserve for Unfunded Commitments
The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated expected credit
losses related to unfunded credit facilities and is included in other liabilities in the Consolidated Balance Sheets. The determination of the
adequacy of the reserve is based upon expected credit losses over the remaining contractual life of the commitments, taking into consideration
the current funded balance and estimated exposure over the reasonable and supportable forecast period. This process takes into consideration
the same risk elements that are analyzed in the determination of the adequacy of the Bancorp’s ALLL, as previously discussed. Net
adjustments to the reserve for unfunded commitments are included in the provision for credit losses in the Consolidated Statements of
Income.
Valuation of Servicing Rights
When the Bancorp sells loans through either securitizations or individual loan sales in accordance with its investment policies, it often obtains
servicing rights. The Bancorp may also purchase servicing rights. The Bancorp has elected to measure all existing classes of its residential
mortgage servicing rights at fair value at each reporting date with changes in the fair value of servicing rights reported in earnings in the
period in which the changes occur. Servicing rights are valued using internal OAS models. Significant management judgment is necessary to
identify key economic assumptions used in estimating the fair value of the servicing rights including the prepayment speeds of the underlying
loans, the weighted-average life, the OAS and the weighted-average coupon rate, as applicable. The primary risk of material changes to the
value of the servicing rights resides in the potential volatility in the economic assumptions used, particularly the prepayment speeds. In order
to assist in the assessment of the fair value of servicing rights, the Bancorp obtains external valuations of the servicing rights portfolio from
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54 Fifth Third Bancorp
third parties and participates in peer surveys that provide additional confirmation of the reasonableness of the key assumptions utilized in the
internal OAS model. For additional information on servicing rights, refer to Note 13 of the Notes to Consolidated Financial Statements.
Goodwill
Business combinations entered into by the Bancorp typically include the recognition of goodwill. U.S. GAAP requires goodwill to be tested
for impairment at the reporting unit level on an annual basis and more frequently if events or circumstances indicate that there may be
impairment. As further discussed in Note 1 of the Notes to Consolidated Financial Statements, the Bancorp’s annual goodwill impairment test
has historically been performed as of September 30 of each year. However, in 2024, the testing was performed as of September 30 and again
as of October 1 to reflect the change in date in which the Bancorp will perform its annual goodwill impairment testing in future periods.
Impairment exists when a reporting unit’s carrying amount of goodwill exceeds its implied fair value. In testing goodwill for impairment,
U.S. GAAP permits the Bancorp to first assess qualitative factors to determine whether it is more likely than not that the fair value of a
reporting unit is less than its carrying amount. In this qualitative assessment, the Bancorp evaluates events and circumstances which may
include, but are not limited to, the general economic environment, banking industry and market conditions, the overall financial performance
of the Bancorp, the performance of the Bancorp’s common stock, the key financial performance metrics of the Bancorp’s reporting units and
events affecting the reporting units to determine if it is not more likely than not that the fair value of a reporting unit is less than its carrying
amount. If the quantitative impairment test is required or the decision to bypass the qualitative assessment is elected, the Bancorp performs
the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying
amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total
amount of goodwill allocated to that reporting unit. A recognized impairment loss cannot be reversed in future periods even if the fair value
of the reporting unit subsequently recovers.
The fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market
participants at the measurement date. As none of the Bancorp’s reporting units are publicly traded, individual reporting unit fair value
determinations cannot be directly correlated to the Bancorp’s stock price. The determination of the fair value of a reporting unit is a
subjective process that involves the use of estimates and judgments, particularly related to cash flows, the appropriate discount rates and an
applicable control premium. The determination of the fair value of the Bancorp’s reporting units includes both an income-based approach and
a market-based approach. The income-based approach utilizes the reporting unit’s forecasted cash flows (including a terminal value approach
to estimate cash flows beyond the final year of the forecast) and the reporting unit’s estimated cost of equity as the discount rate. Significant
management judgment is necessary in the preparation of each reporting unit’s forecasted cash flows surrounding expectations for earnings
projections, growth and credit loss expectations and actual results may differ from forecasted results. Additionally, the Bancorp determines its
market capitalization based on the average of the closing price of the Bancorp’s stock during the month including the measurement date,
incorporating an additional control premium, and compares this market-based fair value measurement to the aggregate fair value of the
Bancorp’s reporting units in order to corroborate the results of the income approach. Refer to Note 10 of the Notes to Consolidated Financial
Statements for further information regarding the Bancorp’s goodwill.
Legal Contingencies
The Bancorp and its subsidiaries are parties to numerous claims and lawsuits as well as threatened or potential actions or claims concerning
matters arising from the conduct of its business activities. The outcome of claims or litigation and the timing of ultimate resolution are
inherently difficult to predict and significant judgment may be required in the determination of both the probability of loss and whether the
amount of the loss is reasonably estimable. The Bancorp’s estimates are subjective and are based on the status of legal and regulatory
proceedings, the merit of the Bancorp’s defenses and consultation with internal and external legal counsel. An accrual for a potential
litigation loss is established when information related to the loss contingency indicates both that a loss is probable and that the amount of loss
can be reasonably estimated. Refer to Note 19 of the Notes to Consolidated Financial Statements for further information regarding the
Bancorp’s legal proceedings.
Fair Value Measurements
The Bancorp measures certain financial assets and liabilities at fair value in accordance with U.S. GAAP, which defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The Bancorp employs various valuation approaches to measure fair value including the market, income and cost approaches. The
market approach uses prices or relevant information generated by market transactions involving identical or comparable assets or liabilities.
The income approach involves discounting future amounts to a single present amount and is based on current market expectations about those
future amounts. The cost approach is based on the amount that currently would be required to replace the service capacity of the asset.
U.S. GAAP establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad
levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). A financial instrument’s categorization within the fair value hierarchy is based upon the
lowest level of input that is significant to the instrument’s fair value measurement. For additional information on the fair value hierarchy and
fair value measurements, refer to Note 1 of the Notes to Consolidated Financial Statements.
The Bancorp’s fair value measurements involve various valuation techniques and models, which involve inputs that are observable, when
available. Valuation techniques and parameters used for measuring assets and liabilities are reviewed and validated by the Bancorp on a
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55 Fifth Third Bancorp
quarterly basis. Additionally, the Bancorp monitors the fair values of significant assets and liabilities using a variety of methods including the
evaluation of pricing runs and exception reports based on certain analytical criteria, comparison to previous trades and overall review and
assessments for reasonableness. The level of management judgment necessary to determine fair value varies based upon the methods used in
the determination of fair value. Financial instruments that are measured at fair value using quoted prices in active markets (Level 1) require
minimal judgment. The valuation of financial instruments when quoted market prices are not available (Levels 2 and 3) may require
significant management judgment to assess whether quoted prices for similar instruments exist, the impact of changing market conditions
including reducing liquidity in the capital markets and the use of estimates surrounding significant unobservable inputs. Table 5 provides a
summary of the fair value of financial instruments carried at fair value on a recurring basis and the amounts of financial instruments valued
using Level 3 inputs.
TABLE 5: Fair Value Summary
As of ($ in millions)
December 31, 2024
December 31, 2023
Balance
Level 3
Balance
Level 3
Assets carried at fair value
$
45,153
1,814
56,073
1,859
As a percent of total assets
21 %
1
26
1
Liabilities carried at fair value
$
3,114
175
3,106
174
As a percent of total liabilities
2 %
—
2
—
Refer to Note 28 of the Notes to Consolidated Financial Statements for further information on fair value measurements including a
description of the valuation methodologies used for significant financial instruments.
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STATEMENTS OF INCOME ANALYSIS
The Bancorp’s Consolidated Statements of Income are presented in Item 8 of this Annual Report on Form 10-K. The following analysis
focuses on a comparison of results for the year ended December 31, 2024 with the year ended December 31, 2023. Refer to the Bancorp’s
Annual Report on Form 10-K for the year ended December 31, 2023 for additional information comparing the results for the year ended
December 31, 2023 to the year ended December 31, 2022.
Net Interest Income
Net interest income is the interest earned on loans and leases (including yield-related fees), securities and other short-term investments less
the interest incurred on core deposits and wholesale funding (including CDs over $250,000, federal funds purchased, other short-term
borrowings and long-term debt). The net interest margin is calculated by dividing net interest income by average interest-earning assets. Net
interest rate spread is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing
liabilities. Net interest margin is typically greater than net interest rate spread due to the interest income earned on those assets that are funded
by noninterest-bearing liabilities, or free funding, such as demand deposits or shareholders’ equity.
Tables 6 and 7 present the components of net interest income, net interest margin and net interest rate spread for the years ended
December 31, 2024, 2023 and 2022, as well as the relative impact of changes in the average balance sheet and changes in interest rates on net
interest income. Nonaccrual loans and leases and loans and leases held for sale have been included in the average loan and lease balances.
Average outstanding securities balances are based on amortized cost with any unrealized gains or losses included in average other assets.
Net interest income on an FTE basis (non-GAAP) was $5.7 billion for the year ended December 31, 2024, decreasing $198 million compared
to the prior year. Net interest income for the year ended December 31, 2024 was negatively impacted by lower average loan balances as a
result of actions taken in 2023 to reduce lower returning facilities as well as decreased demand. Additionally, funding costs remained elevated
as higher average market rates continued to drive deposit balance migration into higher yielding products. These negative impacts were
partially offset by higher yields on average interest-earning assets and an increase in the average balances of other short-term investments.
Net interest rate spread on an FTE basis (non-GAAP) was 2.08% for the year ended December 31, 2024 compared to 2.24% during the year
ended December 31, 2023. Rates paid on average interest-bearing liabilities increased 42 bps, partially offset by a 26 bps increase in yields on
average interest-earning assets for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Net interest margin on an FTE basis (non-GAAP) was 2.90% for the year ended December 31, 2024 compared to 3.05% for the year ended
December 31, 2023. Net interest margin for the year ended December 31, 2024 was primarily impacted by the previously mentioned impacts
of higher market interest rates, migration of average balances of deposits from demand deposits to interest-bearing deposits and a decrease in
the average balances of loans and leases. Net interest income was also negatively impacted by elevated balances of other short-term
investments during the year ended December 31, 2024. Net interest margin results are expected to modestly increase over the next several
quarters driven by fixed-rate asset repricing and moderating deposit costs. However, net interest margin may be negatively impacted by
increased deposit competition or higher levels of cash and other short-term investments.
Interest income on an FTE basis (non-GAAP) from loans and leases increased $142 million from the year ended December 31, 2023
primarily driven by an increase in yields on loans and leases, partially offset by a decrease in the average balances of commercial and
industrial loans. For more information on the Bancorp’s loan and lease portfolio, refer to the Loans and Leases subsection of the Balance
Sheet Analysis section of MD&A. Interest income on an FTE basis (non-GAAP) from investment securities and other short-term investments
increased $523 million from the year ended December 31, 2023 primarily due to an increase in the average balances of other short-term
investments and higher yields on average taxable securities driven by fixed-rate asset repricing.
Interest expense on average core deposits increased $852 million from the year ended December 31, 2023 primarily due to an increase in the
cost of average interest-bearing core deposits to 287 bps for the year ended December 31, 2024 from 238 bps for the year ended December
31, 2023, as a result of a mix shift from non-interest bearing to interest-bearing deposit products, higher short-term interest rates and an
increase in the average balances of interest-bearing core deposits. Refer to the Deposits subsection of the Balance Sheet Analysis section of
MD&A for additional information on the Bancorp’s deposits.
Interest expense on average wholesale funding increased $11 million for the year ended December 31, 2024 compared to the year ended
December 31, 2023 primarily due to increases in the average balances of and yields on long-term debt, partially offset by a decrease in the
average balances of FHLB advances. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional
information on the Bancorp’s borrowings. During the year ended December 31, 2024, average wholesale funding represented 16% of average
interest-bearing liabilities compared to 18% for the year ended December 31, 2023. For more information on the Bancorp’s interest rate risk
management, including estimated earnings sensitivity to changes in market interest rates, refer to the Interest Rate and Price Risk
Management subsection of the Risk Management section of MD&A.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
57 Fifth Third Bancorp
TABLE 6: Consolidated Average Balance Sheets and Analysis of Net Interest Income on an FTE Basis
For the years ended December 31
2024
2023
2022
($ in millions)
Average
Balance
Interest
Earned/
Paid
Average
Yield/
Rate
Average
Balance
Interest
Earned/
Paid
Average
Yield/
Rate
Average
Balance
Interest
Earned/
Paid
Average
Yield/
Rate
Assets:
Interest-earning assets:
Loans and leases:(a)
Commercial and industrial loans
$ 52,210
3,657
7.00 % $ 57,005
3,887
6.82 % $ 55,618
2,401
4.32 %
Commercial mortgage loans
11,501
706
6.14
11,262
672
5.97
10,723
415
3.87
Commercial construction loans
5,835
410
7.02
5,582
380
6.80
5,458
239
4.38
Commercial leases
2,677
119
4.44
2,629
95
3.63
2,828
85
3.02
Total commercial loans and leases
$ 72,223
4,892
6.77 % $ 76,478
5,034
6.58 % $ 74,627
3,140
4.21 %
Residential mortgage loans
17,537
645
3.68
18,002
621
3.45
19,731
645
3.27
Home equity
4,002
330
8.25
3,936
298
7.58
3,971
177
4.46
Indirect secured consumer loans
15,583
822
5.27
15,944
687
4.31
16,914
560
3.31
Credit card
1,719
236 13.70
1,800
252 14.00
1,737
221 12.73
Solar energy installation loans
3,960
318
8.04
2,958
180
6.09
574
15
2.69
Other consumer loans
2,700
248
9.19
3,164
277
8.74
3,007
205
6.82
Total consumer loans
$ 45,501
2,599
5.71 % $ 45,804
2,315
5.05 % $ 45,934
1,823
3.97 %
Total loans and leases
$ 117,724
7,491
6.36 % $ 122,282
7,349
6.01 % $ 120,561
4,963
4.12 %
Securities:
Taxable
55,227
1,803
3.26
56,066
1,733
3.09
52,218
1,493
2.86
Exempt from income taxes(a)
1,392
46
3.25
1,461
47
3.20
1,128
31
2.72
Other short-term investments
20,457
1,110
5.43
11,934
656
5.50
12,419
116
0.94
Total interest-earning assets
$ 194,800
10,450
5.36 % $ 191,743
9,785
5.10 % $ 186,326
6,603
3.54 %
Cash and due from banks
2,677
2,772
3,093
Other assets
17,637
16,169
19,490
Allowance for loan and lease losses
(2,308)
(2,258)
(1,980)
Total assets
$ 212,806
$ 208,426
$ 206,929
Liabilities and Equity:
Interest-bearing liabilities:
Interest checking deposits
$ 58,599
1,924
3.28 % $ 52,378
1,552
2.96 % $ 45,835
297
0.65 %
Savings deposits
17,594
119
0.68
20,872
147
0.71
23,445
32
0.14
Money market deposits
36,165
1,050
2.90
30,943
666
2.15
29,326
67
0.23
Foreign office deposits
158
3
2.05
158
3
1.82
170
1
0.74
CDs $250,000 or less
10,537
432
4.10
8,298
308
3.71
2,342
9
0.40
Total interest-bearing core deposits
$ 123,053
3,528
2.87 % $ 112,649
2,676
2.38 % $ 101,118
406
0.40 %
CDs over $250,000
4,069
208
5.11
5,332
253
4.74
1,688
41
2.45
Federal funds purchased
207
11
5.21
307
15
4.96
381
6
1.69
Securities sold under repurchase agreements
362
7
1.86
348
4
1.22
482
1
0.17
FHLB advances
2,602
145
5.56
4,596
235
5.11
3,733
98
2.63
Derivative collateral and other borrowed money
60
5
8.92
100
8
8.24
329
9
2.94
Long-term debt
15,835
892
5.63
14,260
742
5.20
11,893
417
3.50
Total interest-bearing liabilities
$ 146,188
4,796
3.28 % $ 137,592
3,933
2.86 % $ 119,624
978
0.82 %
Demand deposits
40,314
46,195
60,185
Other liabilities
6,906
6,935
8,040
Total liabilities
$ 193,408
$ 190,722
$ 187,849
Total equity
$ 19,398
$ 17,704
$ 19,080
Total liabilities and equity
$ 212,806
$ 208,426
$ 206,929
Net interest income (FTE)(b)
$
5,654
$
5,852
$
5,625
Net interest margin (FTE)(b)
2.90 %
3.05 %
3.02 %
Net interest rate spread (FTE)(b)
2.08
2.24
2.72
Interest-bearing liabilities to interest-earning assets
75.05
71.76
64.20
(a)
The FTE adjustments included in the above table were $24, $25 and $16 for the years ended December 31, 2024, 2023 and 2022, respectively.
(b)
Net interest income (FTE), net interest margin (FTE) and net interest rate spread (FTE) are non-GAAP measures. For further information, refer to the Non-GAAP
Financial Measures section of MD&A.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
58 Fifth Third Bancorp
TABLE 7: Changes in Net Interest Income Attributable to Volume and Yield/Rate on an FTE Basis(a)
For the years ended December 31
2024 Compared to 2023
2023 Compared to 2022
($ in millions)
Volume
Yield/Rate
Total
Volume
Yield/Rate
Total
Assets:
Interest-earning assets:
Loans and leases:
Commercial and industrial loans
$
(334)
104
(230)
61
1,425
1,486
Commercial mortgage loans
14
20
34
22
235
257
Commercial construction loans
18
12
30
6
135
141
Commercial leases
2
22
24
(6)
16
10
Total commercial loans and leases
$
(300)
158
(142)
83
1,811
1,894
Residential mortgage loans
(16)
40
24
(58)
34
(24)
Home equity
5
27
32
(2)
123
121
Indirect secured consumer loans
(16)
151
135
(34)
161
127
Credit card
(11)
(5)
(16)
8
23
31
Solar energy installation loans
71
67
138
146
19
165
Other consumer loans
(42)
13
(29)
36
36
72
Total consumer loans
$
(9)
293
284
96
396
492
Total loans and leases
$
(309)
451
142
179
2,207
2,386
Securities:
Taxable
(26)
96
70
114
126
240
Exempt from income taxes
(2)
1
(1)
10
6
16
Other short-term investments
462
(8)
454
(5)
545
540
Total change in interest income
$
125
540
665
298
2,884
3,182
Liabilities:
Interest-bearing liabilities:
Interest checking deposits
$
195
177
372
48
1,207
1,255
Savings deposits
(22)
(6)
(28)
(4)
119
115
Money market deposits
125
259
384
4
595
599
Foreign office deposits
—
—
—
—
2
2
CDs $250,000 or less
89
35
124
71
228
299
Total interest-bearing core deposits
$
387
465
852
119
2,151
2,270
CDs over $250,000
(63)
18
(45)
148
64
212
Federal funds purchased
(5)
1
(4)
(1)
10
9
Securities sold under repurchase agreements
—
3
3
—
3
3
FHLB advances
(109)
19
(90)
27
110
137
Derivative collateral and other borrowed money
(4)
1
(3)
(10)
9
(1)
Long-term debt
86
64
150
94
231
325
Total change in interest expense
$
292
571
863
377
2,578
2,955
Total change in net interest income
$
(167)
(31)
(198)
(79)
306
227
(a)
Changes in interest not solely due to volume or yield/rate are allocated in proportion to the absolute dollar amount of change in volume and yield/rate.
Provision for Credit Losses
The Bancorp provides, as an expense, an amount for expected credit losses within the loan and lease portfolio and the portfolio of unfunded
commitments that is based on factors discussed in the Critical Accounting Policies section of MD&A. The provision is recorded to bring the
ALLL and reserve for unfunded commitments to a level deemed appropriate by the Bancorp to cover losses expected in the portfolios. Actual
credit losses on loans and leases are charged against the ALLL. The amount of loans and leases actually removed from the Consolidated
Balance Sheets are referred to as charge-offs. Net charge-offs include current period charge-offs less recoveries on previously charged-
off loans and leases.
The provision for credit losses was $530 million for the year ended December 31, 2024 compared to $515 million in the prior year. Provision
expense for the year ended December 31, 2024 was affected by the impacts of deterioration in the macroeconomic forecast for the
commercial portfolio, higher period-end loan and lease balances and increases in specific reserves on individually evaluated commercial
loans, partially offset by the impacts of changes in consumer loan portfolio mix, improvement in the macroeconomic forecast for the
consumer loan portfolio and improvements in probability of default ratings on commercial loans.
The ALLL increased $30 million from December 31, 2023 to $2.4 billion at December 31, 2024. At December 31, 2024, the ALLL as a
percent of portfolio loans and leases decreased to 1.96%, compared to 1.98% at December 31, 2023. The reserve for unfunded commitments
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
59 Fifth Third Bancorp
decreased $32 million from December 31, 2023 to $134 million at December 31, 2024. At December 31, 2024, the ACL as a percent of
portfolio loans and leases decreased to 2.08%, compared to 2.12% at December 31, 2023.
Refer to the Credit Risk Management subsection of the Risk Management section of MD&A as well as Note 6 of the Notes to Consolidated
Financial Statements for more information on the provision for credit losses, including an analysis of loan and lease portfolio composition,
nonperforming assets, net charge-offs and other factors considered by the Bancorp in assessing the credit quality of the loan and lease
portfolio and determining the level of the ACL.
Noninterest Income
Noninterest income decreased $32 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The
following table presents the components of noninterest income:
TABLE 8: Components of Noninterest Income
For the years ended December 31 ($ in millions)(a)
2024
2023
2022
Wealth and asset management revenue
$
647
581
570
Commercial payments revenue
608
564
568
Consumer banking revenue
555
546
542
Capital markets fees
424
422
387
Commercial banking revenue
377
409
419
Mortgage banking net revenue
211
250
215
Other noninterest income
12
91
149
Securities gains (losses), net
15
18
(84)
Total noninterest income
$
2,849
2,881
2,766
(a)
During 2024, certain noninterest income line items were reclassified to better align disclosures to business activities. These reclassifications were retrospectively
applied to all prior periods presented. Total noninterest income did not change as a result of these reclassifications.
Wealth and asset management revenue increased $66 million for the year ended December 31, 2024 compared to the year ended
December 31, 2023 primarily driven by increases in personal asset management revenue and brokerage income. The Bancorp’s trust and
registered investment advisory businesses had approximately $634 billion and $574 billion in total assets under care as of December 31, 2024
and 2023, respectively, and managed $69 billion and $59 billion in assets for individuals, corporations and not-for-profit organizations as of
December 31, 2024 and 2023, respectively.
Commercial payments revenue increased $44 million for the year ended December 31, 2024 compared to the year ended December 31, 2023
primarily driven by an increase in treasury management fees due to new client acquisition and higher average revenue per existing customer.
Consumer banking revenue increased $9 million for the year ended December 31, 2024 compared to the year ended December 31, 2023
primarily driven by an increase in interchange income associated with higher transaction volumes.
Capital markets fees increased $2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily
driven by increases in corporate bond fees and loan syndication revenue, partially offset by a decrease in revenue from commercial customer
derivatives.
Commercial banking revenue decreased $32 million for the year ended December 31, 2024 compared to the year ended December 31, 2023
primarily driven by a decrease in operating lease income.
Mortgage banking net revenue decreased $39 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The following table presents the components of mortgage banking net revenue:
TABLE 9: Components of Mortgage Banking Net Revenue
For the years ended December 31 ($ in millions)
2024
2023
2022
Origination fees and gains on loan sales
$
67
79
91
Net mortgage servicing revenue:
Gross mortgage servicing fees
309
319
310
Net valuation adjustments on MSRs and free-standing derivatives purchased to
economically hedge MSRs
(165)
(148)
(186)
Net mortgage servicing revenue
144
171
124
Total mortgage banking net revenue
$
211
250
215
Origination fees and gains on loan sales decreased $12 million for the year ended December 31, 2024 compared to the year ended
December 31, 2023 primarily driven by the impact of gains recognized during the year ended December 31, 2023 from sales of forbearance
loans that were repurchased from GNMA and a decline in revenue margins due to the competitive environment. Residential mortgage loan
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
60 Fifth Third Bancorp
originations increased to $6.5 billion for the year ended December 31, 2024 from $5.6 billion for the year ended December 31, 2023
primarily due to the focus to increase held for investment residential mortgage loans in 2024.
The following table presents the components of net valuation adjustments on the MSR portfolio and the impact of the Bancorp’s hedging
strategy:
TABLE 10: Components of Net Valuation Adjustments on MSRs
For the years ended December 31 ($ in millions)
2024
2023
2022
Changes in fair value and settlement of free-standing derivatives purchased to economically
hedge the MSR portfolio
$
(88)
(43)
(363)
Changes in fair value:
Due to changes in inputs or assumptions(a)
74
43
355
Other changes in fair value(b)
(151)
(148)
(178)
Net valuation adjustments on MSRs and free-standing derivatives purchased to
economically hedge MSRs
$
(165)
(148)
(186)
(a)
Primarily reflects changes in prepayment speed and OAS assumptions which are updated based on market interest rates.
(b)
Primarily reflects changes due to realized cash flows and the passage of time.
For the years ended December 31, 2024 and 2023, the Bancorp recognized losses of $77 million and $105 million, respectively, in mortgage
banking net revenue for valuation adjustments on the MSR portfolio. The valuation adjustments on the MSR portfolio included increases of
$74 million and $43 million for the years ended December 31, 2024 and 2023, respectively, due to changes in market rates and other inputs in
the valuation model, including future prepayment speeds and OAS assumptions. Mortgage rates decreased during the year ended
December 31, 2024 which caused an increase in prepayment speeds. The fair value of the MSR portfolio also decreased $151 million and
$148 million as a result of contractual principal payments and actual prepayment activity for the years ended December 31, 2024 and 2023,
respectively.
Further detail on the valuation of MSRs can be found in Note 13 of the Notes to Consolidated Financial Statements. The Bancorp maintains
a non-qualifying hedging strategy to manage a portion of the risk associated with changes in the valuation of the MSR portfolio. Refer to
Note 14 of the Notes to Consolidated Financial Statements for more information on the free-standing derivatives used to economically hedge
the MSR portfolio. In addition to the derivative positions used to economically hedge the MSR portfolio, the Bancorp acquires various
securities as a component of its non-qualifying hedging strategy. Net gains and losses on these securities were immaterial during both the
years ended December 31, 2024 and 2023 and were a net loss of $2 million during the year ended December 31, 2022.
The Bancorp’s total residential mortgage loans serviced at December 31, 2024 and 2023 were $110.9 billion and $117.0 billion, respectively,
with $94.2 billion and $100.8 billion, respectively, of residential mortgage loans serviced for others.
The following table presents the components of other noninterest income:
TABLE 11: Components of Other Noninterest Income
For the years ended December 31 ($ in millions)
2024
2023
2022
BOLI income
$
66
61
64
Private equity investment income
35
44
70
Equity method investment income
18
52
22
Income from the TRA associated with Worldpay, Inc.
11
22
46
Gains (losses) on sales of businesses
7
—
(7)
Loss on swap associated with the sale of Visa, Inc. Class B Shares
(138)
(94)
(84)
Other, net
13
6
38
Total other noninterest income
$
12
91
149
Other noninterest income decreased $79 million for the year ended December 31, 2024 compared to the year ended December 31, 2023
primarily due to an increase in the loss on the swap associated with the sale of Visa, Inc. Class B Shares and a decrease in equity method
investment income.
The Bancorp recognized negative valuation adjustments of $138 million related to the Visa total return swap for the year ended December 31,
2024 compared to $94 million for the year ended December 31, 2023. For additional information on the valuation of the swap associated with
the sale of Visa, Inc. Class B Shares, refer to Note 28 of the Notes to Consolidated Financial Statements. Equity method investment income
decreased $34 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to a gain on the
partial disposition of an equity method investment during the second quarter of 2023.
Net securities gains were $15 million for the year ended December 31, 2024 compared to $18 million for the year ended December 31, 2023.
For more information, refer to Note 4 of the Notes to Consolidated Financial Statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
61 Fifth Third Bancorp
Noninterest Expense
Noninterest expense decreased $172 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The
following table presents the components of noninterest expense:
TABLE 12: Components of Noninterest Expense
For the years ended December 31 ($ in millions)(a)
2024
2023
2022
Compensation and benefits
$
2,763
2,694
2,554
Technology and communications
474
464
416
Net occupancy expense
339
331
307
Equipment expense
153
148
145
Loan and lease expense
132
133
167
Marketing expense
115
126
118
Card and processing expense
84
84
80
Other noninterest expense
973
1,225
932
Total noninterest expense
$
5,033
5,205
4,719
Efficiency ratio on an FTE basis(b)
59.2 %
59.6
56.2
(a)
During 2024, certain noninterest expense line items were reclassified to better align disclosures to business activities. These reclassifications were retrospectively
applied to all prior periods presented. Total noninterest expense did not change as a result of these reclassifications.
(b)
This is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
Compensation and benefits expense increased $69 million for the year ended December 31, 2024 compared to the year ended December 31,
2023 primarily driven by increases in performance-based compensation, base compensation and employee benefits expense. Full-time
equivalent employees totaled 18,616 at December 31, 2024 compared to 18,724 at December 31, 2023.
Technology and communications expense increased $10 million for the year ended December 31, 2024 compared to the year ended
December 31, 2023 primarily driven by increased investments in strategic initiatives and technology modernization.
Net occupancy expense increased $8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily
driven by expansion of the Southeast branch network and higher expenses associated with the maintenance and renovation of banking
centers.
Marketing expense decreased $11 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily
due to decreases in advertising costs.
The following table presents the components of other noninterest expense:
TABLE 13: Components of Other Noninterest Expense
For the years ended December 31 ($ in millions)
2024
2023
2022
FDIC insurance and other taxes
$
181
385
132
Leasing business expense
92
121
131
Losses and adjustments
86
91
91
Data processing
81
87
82
Dues and subscriptions
61
61
58
Travel
60
56
60
Securities recordkeeping
55
50
48
Professional service fees
49
53
54
Postal and courier
48
46
40
Cash and coin processing
47
48
44
Intangible amortization
35
43
47
Other, net
178
184
145
Total other noninterest expense
$
973
1,225
932
Other noninterest expense decreased $252 million for the year ended December 31, 2024 compared to the year ended December 31, 2023
primarily due to decreases in FDIC insurance and other taxes and leasing business expense.
FDIC insurance and other taxes decreased $204 million for the year ended December 31, 2024 compared to the year ended December 31,
2023 primarily as a result of $28 million of expense recognized during the year ended December 31, 2024 compared to $224 million of
expense recognized during the year ended December 31, 2023 related to the FDIC special assessment, as further discussed in the Overview
section of MD&A.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
62 Fifth Third Bancorp
Leasing business expense decreased $29 million for the year ended December 31, 2024 compared to the year ended December 31, 2023
primarily driven by a decrease in depreciation expense associated with operating lease equipment.
Applicable Income Taxes
The Bancorp’s income before income taxes, applicable income tax expense and effective tax rate are as follows:
TABLE 14: Applicable Income Taxes
For the years ended December 31 ($ in millions)
2024
2023
2022
Income before income taxes
$
2,916
2,988
3,093
Applicable income tax expense
602
639
647
Effective tax rate
20.6 %
21.4
21.0
Applicable income tax expense for all periods presented includes the benefits from tax-exempt income, tax-advantaged investments and tax
credits (and other related tax benefits), partially offset by the effect of proportional amortization of qualifying investments and certain
nondeductible expenses. The tax credits are primarily associated with the Research Credit under Section 41 of the IRC, the Low-Income
Housing Tax Credit program established under Section 42 of the IRC, the New Markets Tax Credit program established under Section 45D of
the IRC, the Rehabilitation Investment Tax Credit program established under Section 47 of the IRC and the Qualified Zone Academy Bond
program established under Section 1397E of the IRC.
The effective tax rates for the years ended December 31, 2024 and 2023 were primarily impacted by $248 million and $230 million,
respectively, of tax credits and other tax benefits from CDC investments, which were partially offset by $200 million for both the years ended
December 31, 2024 and 2023 of proportional amortization related to qualifying investments. The effective tax rates for the years ended
December 31, 2024 and 2023 were also impacted by $27 million and $25 million, respectively, of tax benefits from tax exempt income. For
additional information on income taxes, refer to Note 21 of the Notes to Consolidated Financial Statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
63 Fifth Third Bancorp
BUSINESS SEGMENT REVIEW
The Bancorp has three reportable segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset
Management. Additional information on each segment is included in Note 31 of the Notes to Consolidated Financial Statements. Results of
the Bancorp’s segments are presented based on its management structure and management accounting practices, which are specific to the
Bancorp. Therefore, the financial results of the Bancorp’s segments are not necessarily comparable with similar information for other
financial institutions. The Bancorp refines its methodologies from time to time as management’s accounting practices and businesses change.
The Bancorp manages interest rate risk centrally at the corporate level. By employing an FTP methodology, the segments are insulated from
most benchmark interest rate volatility, enabling them to focus on serving customers through the origination of loans and acceptance of
deposits. The FTP methodology assigns charge and credit rates to classes of assets and liabilities, respectively, based on the estimated amount
and timing of the cash flows for each transaction. Assigning the FTP rate based on matching the duration of cash flows allocates interest
income and interest expense to each segment so its resulting net interest income is insulated from future changes in benchmark interest rates.
The Bancorp’s FTP methodology also allocates the contribution to net interest income of the asset-generating and deposit-providing
businesses on a duration-adjusted basis to better attribute the driver of the performance. As the asset and liability durations are not perfectly
matched, the residual impact of the FTP methodology is captured in General Corporate and Other. The charge and credit rates are determined
using the FTP rate curve, which is based on an estimate of Fifth Third’s marginal borrowing cost in the wholesale funding markets. The FTP
curve is constructed using the U.S. swap curve, brokered CD pricing and unsecured debt pricing.
The Bancorp adjusts the FTP charge and credit rates as dictated by changes in interest rates for various interest-earning assets and interest-
bearing liabilities and by the review of behavioral assumptions, such as prepayment rates on interest-earning assets and the estimated
durations for indeterminate-lived deposits. Key assumptions, including the credit rates provided for deposit accounts, are reviewed annually.
Credit rates for deposit products and charge rates for loan products may be reset more frequently in response to changes in market conditions.
In general, the charge rates on assets increased since December 31, 2023 as they were affected by the prevailing level of interest rates and
repricing characteristics of the portfolio. The credit rates for deposit products decreased modestly since December 31, 2023 due to modified
assumptions and decreasing short-term rates. As a result, net interest income for each segment was negatively impacted during the year ended
December 31, 2024 as a result of these updates to FTP charge and credit rates.
The Bancorp’s methodology for allocating provision for credit losses to the segments includes charges or benefits associated with changes in
criticized commercial loan levels in addition to actual net charge-offs experienced by the loans and leases owned by each segment. Provision
for credit losses attributable to loan and lease growth and changes in ALLL factors is captured in General Corporate and Other. The financial
results of the segments include allocations for shared services and headquarters expenses, which are included within other noninterest
expense. Additionally, the segments form synergies by taking advantage of relationship depth opportunities and funding operations by
accessing the capital markets as a collective unit.
The following table summarizes income (loss) before income taxes on an FTE basis by segment:
TABLE 15: Income (Loss) Before Income Taxes (FTE) by Segment
For the years ended December 31 ($ in millions)
2024
2023
2022
Income Statement Data
Commercial Banking
$
1,829
3,169
2,036
Consumer and Small Business Banking
2,469
3,494
1,656
Wealth and Asset Management
227
353
251
General Corporate and Other(a)
(1,585)
(4,003)
(834)
Income before income taxes (FTE)
$
2,940
3,013
3,109
(a)
General Corporate and Other is not a reportable segment and is presented for reconciliation purposes.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
64 Fifth Third Bancorp
Commercial Banking
Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and
government and professional customers. In addition to the traditional lending and depository offerings, Commercial Banking products and
services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-
based lending, real estate finance, public finance, commercial leasing and syndicated finance.
The following table contains selected financial data for the Commercial Banking segment:
TABLE 16: Commercial Banking
For the years ended December 31 ($ in millions)
2024
2023
2022
Income Statement Data
Net interest income (FTE)(a)
$
2,647
3,828
2,552
Provision for credit losses
304
12
33
Noninterest income:
Commercial payments revenue
529
473
468
Capital markets fees
421
419
387
Commercial banking revenue
373
406
417
Other noninterest income
57
58
68
Noninterest expense:
Compensation and benefits
656
654
639
Net occupancy and equipment expense
64
70
67
Other noninterest expense
1,174
1,279
1,117
Income before income taxes (FTE)
$
1,829
3,169
2,036
Average Balance Sheet Data
Commercial loans and leases, including held for sale
$
67,310
72,293
70,904
Demand deposits
18,204
23,170
35,147
Interest checking deposits
40,214
32,319
21,341
Savings deposits
143
183
280
Money market deposits
5,540
5,063
5,739
Certificates of deposit
45
62
108
Foreign office deposits
158
158
170
(a)
Includes FTE adjustments of $15, $16 and $10 for the years ended December 31, 2024, 2023 and 2022, respectively.
Income before income taxes on an FTE basis was $1.8 billion for the year ended December 31, 2024 compared to $3.2 billion for the year
ended December 31, 2023. The decrease was primarily driven by a decrease in net interest income on an FTE basis and an increase in
provision for credit losses, partially offset by a decrease in noninterest expense and an increase in noninterest income.
Net interest income on an FTE basis decreased $1.2 billion from the year ended December 31, 2023 primarily driven by increases in average
balances of and rates paid on interest checking deposits and money market deposits, decreases in FTP credits on deposits and a decrease in
the average balances of commercial loans and leases, partially offset by an increase in yields on average commercial loans and leases. Net
interest income was also negatively impacted by an increase in FTP charges on loans and leases, which was primarily attributable to higher
FTP charge rates, partially offset by the impact of lower average balances.
Provision for credit losses increased $292 million from the year ended December 31, 2023 primarily driven by an increase in the allocated
provision for credit losses related to commercial criticized assets as well as an increase in net charge-offs on commercial and industrial loans.
Net charge-offs as a percent of average portfolio loans and leases increased to 32 bps for the year ended December 31, 2024 compared to 12
bps for the year ended December 31, 2023.
Noninterest income increased $24 million from the year ended December 31, 2023 primarily driven by an increase in commercial payments
revenue, partially offset by a decrease in commercial banking revenue. Commercial payments revenue increased $56 million from the year
ended December 31, 2023 primarily driven by increases in treasury management fees due to new client acquisition and higher average
revenue per existing customer and commercial card and processing revenue. Commercial banking revenue decreased $33 million from the
year ended December 31, 2023 primarily driven by a decrease in operating lease income.
Noninterest expense decreased $109 million from the year ended December 31, 2023 primarily driven by a decrease in other noninterest
expense. Other noninterest expense decreased $105 million from the year ended December 31, 2023 primarily as a result of a decrease in
allocated expenses, lower leasing business expense and a decrease in losses and adjustments.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
65 Fifth Third Bancorp
Average commercial loans and leases decreased $5.0 billion from the year ended December 31, 2023 driven by a decrease in average
commercial and industrial loans, which was primarily attributable to a planned reduction in balances in the second half of 2023 and lower
demand throughout 2024.
Average deposits increased $3.3 billion from the year ended December 31, 2023 primarily due to increases in average interest checking
deposits and average money market deposits, partially offset by a decrease in average demand deposits. In response to the higher interest rate
environment, deposit balances have generally migrated from noninterest-bearing products or lower interest-bearing products into higher
interest-bearing products. This migration contributed to increases in average interest checking deposits and average money market deposits of
$7.9 billion and $477 million, respectively, along with a decrease in average demand deposits of $5.0 billion from the year ended
December 31, 2023.
Consumer and Small Business Banking
Consumer and Small Business Banking provides a full range of deposit and loan products to individuals and small businesses through a
network of full-service banking centers and relationships with indirect and correspondent loan originators in addition to providing products
designed to meet the specific needs of small businesses, including cash management services. Consumer and Small Business Banking
includes the Bancorp’s residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending, solar
energy installation and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of
residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Indirect lending activities include
extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine
dealers. Solar energy installation loans and certain other consumer loans are originated through a network of contractors and installers.
The following table contains selected financial data for the Consumer and Small Business Banking segment:
TABLE 17: Consumer and Small Business Banking
For the years ended December 31 ($ in millions)
2024
2023
2022
Income Statement Data
Net interest income
$
4,169
5,207
3,131
Provision for credit losses
322
303
139
Noninterest income:
Consumer banking revenue
551
544
538
Wealth and asset management revenue
247
216
204
Mortgage banking net revenue
210
250
214
Commercial payments revenue
76
85
89
Other noninterest income
10
10
8
Noninterest expense:
Compensation and benefits
882
878
828
Net occupancy and equipment expense
263
253
234
Loan and lease expense
80
86
107
Card and processing expense
75
76
72
Other noninterest expense
1,172
1,222
1,148
Income before income taxes
$
2,469
3,494
1,656
Average Balance Sheet Data
Consumer loans, including held for sale
$
42,783
42,933
43,049
Commercial loans
3,454
2,829
1,727
Demand deposits
21,085
21,891
23,600
Interest checking deposits
10,872
12,325
15,191
Savings deposits
14,431
17,017
20,288
Money market deposits
30,127
25,288
22,766
Certificates of deposit
11,241
8,809
2,543
Income before income taxes was $2.5 billion for the year ended December 31, 2024 compared to $3.5 billion for the year ended
December 31, 2023. The decrease was driven by a decrease in net interest income, an increase in provision for credit losses and a decrease in
noninterest income, partially offset by a decrease in noninterest expense.
Net interest income decreased $1.0 billion from the year ended December 31, 2023 primarily due to a decrease in FTP credits on deposits,
increases in rates paid on and average balances of interest-bearing deposits and an increase in FTP charges on loans. These negative impacts
were partially offset by an increase in yields on loans.
Provision for credit losses increased $19 million from the year ended December 31, 2023 primarily due to an increase in the allocated
provision for credit losses related to commercial criticized assets as well as increases in net charge-offs on solar energy installation loans and
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
66 Fifth Third Bancorp
indirect secured consumer loans, partially offset by a decrease in net charge-offs on commercial and industrial loans. Net charge-offs as a
percent of average portfolio loans and leases were 68 bps for both the years ended December 31, 2024 and 2023.
Noninterest income decreased $11 million from the year ended December 31, 2023 primarily driven by a decrease in mortgage banking net
revenue, partially offset by an increase in wealth and asset management revenue. Refer to the Noninterest Income subsection of the
Statements of Income Analysis section of MD&A for additional information on the fluctuations in mortgage banking net revenue. Wealth and
asset management revenue increased $31 million from the year ended December 31, 2023 primarily due to increases in brokerage income and
personal asset management revenue.
Noninterest expense decreased $43 million from the year ended December 31, 2023 primarily due to a decrease in other noninterest expense,
partially offset by an increase in net occupancy and equipment expense. Other noninterest expense decreased $50 million from the year ended
December 31, 2023 primarily due to a decrease in allocated expenses. Net occupancy and equipment expense increased $10 million from the
year ended December 31, 2023 primarily driven by the Bancorp’s expansion into the Southeast markets.
Average consumer loans decreased $150 million from the year ended December 31, 2023 primarily driven by decreases in average residential
mortgage loans, average other consumer loans and average indirect secured consumer loans, partially offset by an increase in average solar
energy installation loans. Average residential mortgage loans decreased from the year ended December 31, 2023 primarily as a result of a
planned reduction in balances in the second half of 2023 and a decrease in residential mortgage loans held for sale as the Bancorp sold
government-guaranteed loans that were previously in forbearance programs. Average other consumer loans decreased from the year ended
December 31, 2023 primarily driven by paydowns of loans originated in connection with one third-party point-of-sale company with which
the Bancorp discontinued the origination of new loans in September 2022. Average indirect secured consumer loans decreased from the year
ended December 31, 2023 primarily as a result of a planned reduction in balances in the second half of 2023, partially offset by increased
loan production during 2024. Average solar energy installation loans increased from the year ended December 31, 2023 primarily due to
increased loan originations. Average commercial loans increased $625 million from the year ended December 31, 2023 primarily driven by
loan originations exceeding payoffs.
Average deposits increased $2.4 billion from the year ended December 31, 2023 driven by increases in average money market deposits and
average CDs, partially offset by decreases in average savings deposits, average interest checking deposits and average demand deposits.
Average money market deposits increased $4.8 billion from the year ended December 31, 2023 primarily as a result of higher average
balances per customer account due to higher offering rates as well as balance migration from demand deposits, interest checking deposits and
savings deposits. Average CDs increased $2.4 billion from the year ended December 31, 2023 primarily due to higher offering rates. Average
savings deposits decreased $2.6 billion, average interest checking deposits decreased $1.5 billion and average demand deposits decreased
$806 million from the year ended December 31, 2023 primarily as a result of lower average balances per customer account as well as balance
migration into CDs and money market accounts.
Wealth and Asset Management
Wealth and Asset Management provides a full range of wealth management solutions for individuals, companies and not-for-profit
organizations, including wealth planning, investment management, banking, insurance, trust and estate services. These offerings include retail
brokerage services for individual clients, advisory services for institutional clients including middle market businesses, non-profits, states and
municipalities, and wealth management strategies and products for high net worth and ultra-high net worth clients.
The following table contains selected financial data for the Wealth and Asset Management segment:
TABLE 18: Wealth and Asset Management
For the years ended December 31 ($ in millions)
2024
2023
2022
Income Statement Data
Net interest income
$
210
360
262
Provision for credit losses
—
1
—
Noninterest income:
Wealth and asset management revenue
397
363
363
Other noninterest income
7
6
5
Noninterest expense:
Compensation and benefits
222
220
218
Other noninterest expense
165
155
161
Income before income taxes
$
227
353
251
Average Balance Sheet Data
Loans and leases, including held for sale
$
4,128
4,386
4,413
Deposits
10,685
11,122
12,725
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
67 Fifth Third Bancorp
Income before income taxes was $227 million for the year ended December 31, 2024 compared to $353 million for the year ended
December 31, 2023. The decrease was primarily driven by a decrease in net interest income, partially offset by an increase in noninterest
income.
Net interest income decreased $150 million from the year ended December 31, 2023 primarily driven by a decrease in FTP credits on deposits
and an increase in rates paid on average deposits.
Noninterest income increased $35 million from the year ended December 31, 2023 primarily due to an increase in wealth and asset
management revenue, which increased $34 million from the year ended December 31, 2023 primarily as a result of an increase in personal
asset management revenue.
Average loans and leases decreased $258 million from the year ended December 31, 2023 primarily driven by payoffs exceeding loan
production.
Average deposits decreased $437 million from the year ended December 31, 2023 primarily driven by decreases in average interest checking
deposits, average demand deposits and average money market deposits as a result of lower average balances per customer account, partially
offset by increases in average savings deposits and average CDs.
General Corporate and Other
General Corporate and Other includes the unallocated portion of the investment securities portfolio, securities gains and losses, certain non-
core deposit funding, unassigned equity, unallocated provision for credit losses or a benefit from the reduction of the ACL, the payment of
preferred stock dividends and certain support activities and other items not attributed to its segments.
Net interest income on an FTE basis increased $2.2 billion from the year ended December 31, 2023 primarily driven by a decrease in FTP
credits on deposits allocated to the segments, an increase in FTP charges on loans and leases allocated to the segments, an increase in interest
income on other short-term investments and decreases in interest expense on FHLB advances and retail brokered CDs. These positive impacts
were partially offset by an increase in interest expense on long-term debt. The increase in FTP charges allocated to the segments was driven
by increases in market interest rates, primarily across the fixed-rate asset portfolios. The decrease in FTP credits allocated to the segments
was driven by lower assumed liquidity premiums from deposit portfolios. Under the Bancorp’s internal reporting methodology, the Bancorp
insulates the segments from interest rate risk associated with fixed-rate lending by transferring this risk to General Corporate and Other
through the FTP methodology. As a result, the amount of FTP credits on deposits earned by the segments generally increases or decreases at a
faster pace than the amount of allocated FTP charges on loans and leases.
The benefit from credit losses was $96 million for the year ended December 31, 2024 compared to a provision for credit losses of $199
million for the year ended December 31, 2023. The benefit from credit losses for the year ended December 31, 2024 was primarily driven by
increases in allocations to the segments.
Noninterest income decreased $80 million from the year ended December 31, 2023 primarily driven by an increase in the loss recognized on
the swap associated with the sale of Visa, Inc. Class B Shares, a decrease in equity method investment income and a decrease in net securities
gains. The decrease in equity method investment income was primarily due to a gain on the partial disposition of an equity method
investment during the second quarter of 2023.
Noninterest expense decreased $32 million from the year ended December 31, 2023 primarily driven by the expense recognized in 2023
associated with the FDIC special assessment, partially offset by a decrease in corporate overhead allocations from General Corporate and
Other to the other segments and an increase in performance-based compensation.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
68 Fifth Third Bancorp
BALANCE SHEET ANALYSIS
Loans and Leases
The Bancorp classifies its commercial loans and leases based upon primary purpose and consumer loans based upon product or collateral.
Table 19 summarizes end of period loans and leases, including loans and leases held for sale, and Table 20 summarizes average total loans
and leases, including average loans and leases held for sale.
TABLE 19: Components of Total Loans and Leases (including loans and leases held for sale)
As of December 31 ($ in millions)
2024
2023
Commercial loans and leases:
Commercial and industrial loans
$
52,286
53,311
Commercial mortgage loans
12,268
11,276
Commercial construction loans
5,617
5,621
Commercial leases
3,188
2,582
Total commercial loans and leases
$
73,359
72,790
Consumer loans:
Residential mortgage loans
18,117
17,360
Home equity
4,188
3,916
Indirect secured consumer loans
16,313
14,965
Credit card
1,734
1,865
Solar energy installation loans
4,202
3,728
Other consumer loans
2,518
2,988
Total consumer loans
$
47,072
44,822
Total loans and leases
$
120,431
117,612
Total portfolio loans and leases (excluding loans and leases held for sale)
$
119,791
117,234
Total loans and leases, including loans and leases held for sale, increased $2.8 billion, or 2%, from December 31, 2023 driven by increases in
both consumer loans and commercial loans and leases.
Commercial loans and leases increased $569 million, or 1%, from December 31, 2023 primarily due to increases in commercial mortgage
loans and commercial leases, partially offset by a decrease in commercial and industrial loans. Commercial mortgage loans increased $992
million, or 9%, from December 31, 2023 and included the impact of commercial construction loans transitioning to commercial mortgage
loans and increased originations. Commercial leases increased $606 million, or 23%, from December 31, 2023 primarily as a result of an
increase in lease originations as a result of a shift in business strategy in the second half of 2024. Commercial and industrial loans decreased
$1.0 billion, or 2%, from December 31, 2023 primarily as a result of payoffs exceeding loan originations due to lower demand throughout
2024.
Consumer loans increased $2.3 billion, or 5%, from December 31, 2023 due to increases in indirect secured consumer loans, residential
mortgage loans, solar energy installation loans and home equity, partially offset by decreases in other consumer loans and credit card. Indirect
secured consumer loans increased $1.3 billion, or 9%, from December 31, 2023 primarily driven by loan production exceeding payoffs and as
a result of a planned reduction in balances in the second half of 2023. Residential mortgage loans increased $757 million, or 4%, from
December 31, 2023 primarily driven by an increase in held-for-investment loan originations and loan purchase transactions completed in the
second half of 2024. Solar energy installation loans increased $474 million, or 13%, from December 31, 2023 primarily driven by increased
loan originations. Home equity loans increased $272 million, or 7%, as loan originations and new advances exceeded payoffs. Other
consumer loans decreased $470 million, or 16%, from December 31, 2023 primarily driven by paydowns of loans originated in connection
with one third-party point-of-sale company with which the Bancorp discontinued the origination of new loans in September 2022. Credit card
decreased $131 million, or 7%, from December 31, 2023 primarily due to a decline in balance-active accounts.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
69 Fifth Third Bancorp
TABLE 20: Components of Average Loans and Leases (including average loans and leases held for sale)
For the years ended December 31 ($ in millions)
2024
2023
Commercial loans and leases:
Commercial and industrial loans
$
52,210
57,005
Commercial mortgage loans
11,501
11,262
Commercial construction loans
5,835
5,582
Commercial leases
2,677
2,629
Total commercial loans and leases
$
72,223
76,478
Consumer loans:
Residential mortgage loans
17,537
18,002
Home equity
4,002
3,936
Indirect secured consumer loans
15,583
15,944
Credit card
1,719
1,800
Solar energy installation loans
3,960
2,958
Other consumer loans
2,700
3,164
Total consumer loans
$
45,501
45,804
Total average loans and leases
$
117,724
122,282
Total average portfolio loans and leases (excluding loans and leases held for sale)
$
117,229
121,645
Average loans and leases, including average loans and leases held for sale, decreased $4.6 billion, or 4%, from December 31, 2023 driven by
decreases in both average commercial loans and leases and average consumer loans.
Average commercial loans and leases decreased $4.3 billion, or 6%, from December 31, 2023 primarily due to a decrease in average
commercial and industrial loans. Average commercial and industrial loans decreased $4.8 billion, or 8%, from December 31, 2023 primarily
as a result of a planned reduction in balances associated with the exit of certain lower returning facilities in the second half of 2023 and lower
demand throughout 2024.
Average consumer loans decreased $303 million, or 1%, from December 31, 2023 primarily due to decreases in average residential mortgage
loans, average other consumer loans and average indirect secured consumer loans, partially offset by increases in average solar energy
installation loans. Average residential mortgage loans decreased $465 million, or 3%, from December 31, 2023 primarily as a result of a
planned reduction in balances in the second half of 2023 and a decrease in residential mortgage loans held for sale as the Bancorp sold
government-guaranteed loans that were previously in forbearance programs. Average other consumer loans decreased $464 million, or 15%,
from December 31, 2023 driven by paydowns of loans originated in connection with one third-party point-of-sale company with which the
Bancorp discontinued the origination of new loans in September 2022. Average indirect secured consumer loans decreased $361 million, or
2%, from December 31, 2023 primarily as a result of a planned reduction in balances in the second half of 2023, partially offset by increased
loan production during 2024. Average solar energy installation loans increased $1.0 billion, or 34%, from December 31, 2023 primarily due
to increased loan originations.
Investment Securities
The Bancorp uses investment securities as a means of managing interest rate risk, providing collateral for pledging purposes and for liquidity
risk management. Total investment securities were $52.4 billion and $51.9 billion at December 31, 2024 and 2023, respectively. The taxable
available-for-sale debt and other investment securities portfolio had an effective duration of 3.8 at December 31, 2024 compared to 4.8 at
December 31, 2023. The taxable held-to-maturity securities portfolio had an effective duration of 5.5 at December 31, 2024.
Debt securities are classified as available-for-sale when, in management’s judgment, they may be sold in response to, or in anticipation of,
changes in market conditions. Securities that management has the intent and ability to hold to maturity are classified as held-to-maturity and
reported at amortized cost. Debt securities are classified as trading typically when bought and held principally for the purpose of selling them
in the near term. At December 31, 2024, the Bancorp’s investment securities portfolio consisted primarily of AAA-rated available-for-sale
debt and other securities and held-to-maturity securities. The Bancorp held an immaterial amount of below-investment grade available-for-
sale debt and other securities and held-to-maturity securities at both December 31, 2024 and 2023.
At both December 31, 2024 and 2023, the Bancorp did not recognize an allowance for credit losses for its investment securities. The Bancorp
also did not recognize provision for credit losses for investment securities during the years ended December 31, 2024, 2023 and 2022.
During the years ended December 31, 2024, 2023 and 2022, the Bancorp recognized $21 million, $5 million and $1 million, respectively, of
impairment losses on available-for-sale debt and other securities, included in securities gains (losses), net, in the Consolidated Statements of
Income. These losses related to certain securities in unrealized loss positions where the Bancorp had determined that it no longer intends to
hold the securities until the recovery of their amortized cost bases.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
70 Fifth Third Bancorp
The following table summarizes the end of period components of investment securities:
TABLE 21: Components of Investment Securities
As of December 31 ($ in millions)
2024
2023
Available-for-sale debt and other securities (amortized cost basis):
U.S. Treasury and federal agencies securities
$
4,358
4,477
Obligations of states and political subdivisions securities
—
2
Mortgage-backed securities:
Agency residential mortgage-backed securities
6,460
11,564
Agency commercial mortgage-backed securities
23,853
28,945
Non-agency commercial mortgage-backed securities
4,505
4,872
Asset-backed securities and other debt securities
3,924
5,207
Other securities(a)
778
722
Total available-for-sale debt and other securities
$
43,878
55,789
Held-to-maturity securities (amortized cost basis):(b)
U.S. Treasury and federal agencies securities
$
2,370
—
Mortgage-backed securities:
Agency residential mortgage-backed securities
4,898
—
Agency commercial mortgage-backed securities
4,008
—
Asset-backed securities and other debt securities
2
2
Total held-to-maturity securities
$
11,278
2
Trading debt securities (fair value):
U.S. Treasury and federal agencies securities
$
626
647
Obligations of states and political subdivisions securities
120
39
Agency residential mortgage-backed securities
10
6
Asset-backed securities and other debt securities
429
207
Total trading debt securities
$
1,185
899
Total equity securities (fair value)
$
341
613
(a)
Other securities consist of FHLB, FRB and DTCC restricted stock holdings that are carried at cost.
(b)
Includes a discount of $865 at December 31, 2024 pertaining to the remaining unamortized portion of unrealized losses on securities transferred to HTM.
In January 2024, the Bancorp transferred $12.6 billion (amortized cost basis) of securities from available-for-sale to held-to-maturity to
reflect the Bancorp’s change in intent to hold these securities to maturity in order to reduce potential capital volatility associated with
investment security market price fluctuations. The transfer included U.S. Treasury and federal agencies securities, agency residential
mortgage-backed securities and agency commercial mortgage-backed securities. On the date of the transfer, pre-tax unrealized losses of
$994 million were included in AOCI related to these transferred securities. The unrealized losses that existed on the date of transfer will
continue to be reported as a component of AOCI and will be amortized into income over the remaining life of the securities as an adjustment
to yield, offsetting the amortization of the discount resulting from the transfer recorded at fair value.
The following table presents the estimated future amortization of unrealized losses related to securities transferred from available-for-sale to
held-to-maturity. At December 31, 2024, these transferred securities had an estimated weighted-average life of 6.9 years.
TABLE 22: Estimated Amortization of Unrealized Losses on Securities Transferred to Held-to-Maturity
As of December 31, 2024 ($ in millions)
2025
$
62
2026
72
2027
84
2028
123
2029
57
Thereafter
467
Unamortized portion of unrealized losses
$
865
On an amortized cost basis, available-for-sale debt and other securities and held-to-maturity securities comprised 28% of total interest-
earning assets at both December 31, 2024 and 2023. The estimated weighted-average life of the debt securities in the available-for-sale debt
and other securities portfolio was 5.0 years and 6.2 years at December 31, 2024 and 2023, respectively. In addition, the debt securities in the
available-for-sale debt and other securities portfolio had a weighted-average yield of 3.08% and 3.06% at December 31, 2024 and 2023,
respectively. At December 31, 2024, the held-to-maturity securities portfolio had an estimated weighted-average life of 6.9 years and a
weighted-average yield of 3.41%.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
71 Fifth Third Bancorp
Information presented in Tables 23 and 24 is on a weighted-average life basis, anticipating future prepayments. Yield information is
presented on an FTE basis and is computed using amortized cost balances and reflects the impact of prepayments. Maturity and yield
calculations for the total available-for-sale debt and other securities portfolio exclude other securities that have no stated yield or maturity.
The fair values of investment securities are impacted by interest rates, credit spreads, market volatility and liquidity conditions. The fair value
of the Bancorp’s investment securities portfolio generally decreases when interest rates increase or when credit spreads widen. Total net
unrealized losses on the available-for-sale debt and other securities portfolio were $4.3 billion and $5.4 billion at December 31, 2024 and
2023, respectively.
TABLE 23: Characteristics of Available-for-Sale Debt and Other Securities
As of December 31, 2024 ($ in millions)
Amortized
Cost
Fair Value
Weighted-Average
Life (in years)
Weighted-Average
Yield
U.S. Treasury and federal agencies securities:
Average life within one year
$
1,682
1,683
0.7
4.52 %
Average life after one year through five years
2,676
2,677
1.4
4.53
Total
$
4,358
4,360
1.1
4.53 %
Agency residential mortgage-backed securities:
Average life within one year
3
2
0.6
4.49
Average life after one year through five years
1,368
1,257
3.8
2.84
Average life after five years through ten years
4,346
3,866
6.5
3.57
Average life after ten years
743
556
11.0
2.87
Total
$
6,460
5,681
6.4
3.33 %
Agency commercial mortgage-backed securities:(a)
Average life within one year
706
699
0.5
3.44
Average life after one year through five years
10,277
9,524
3.2
2.64
Average life after five years through ten years
10,022
8,335
7.3
2.64
Average life after ten years
2,848
2,274
11.9
2.75
Total
$
23,853
20,832
5.9
2.68 %
Non-agency commercial mortgage-backed securities:
Average life within one year
1,292
1,282
0.4
3.27
Average life after one year through five years
1,347
1,283
2.4
3.17
Average life after five years through ten years
1,866
1,602
6.7
2.77
Total
$
4,505
4,167
3.6
3.03 %
Asset-backed securities and other debt securities:
Average life within one year
643
635
0.5
3.07
Average life after one year through five years
2,489
2,355
2.9
3.53
Average life after five years through ten years
787
736
5.9
3.93
Average life after ten years
5
3
13.5
5.75
Total
$
3,924
3,729
3.2
3.54 %
Other securities
778
778
Total available-for-sale debt and other securities
$
43,878
39,547
5.0
3.08 %
(a)
Taxable-equivalent yield adjustments included in the above table are 0.01%, 0.18% and 0.03% for securities with an average life between 5 and 10 years, average
life greater than 10 years and in total, respectively.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
72 Fifth Third Bancorp
TABLE 24: Characteristics of Held-to-Maturity Securities
As of December 31, 2024 ($ in millions)
Amortized Cost(b)
Fair Value
Weighted-Average
Life
(in years)
Weighted-Average
Yield
U.S. Treasury and federal agencies securities:
Average life after one year through five years
$
2,370
2,344
3.0
2.45 %
Total
$
2,370
2,344
3.0
2.45 %
Agency residential mortgage-backed securities:
Average life after five years through ten years
4,898
4,701
8.9
3.41
Total
$
4,898
4,701
8.9
3.41 %
Agency commercial mortgage-backed securities:(a)
Average life within one year
38
38
0.2
3.59
Average life after one year through five years
861
847
3.6
3.84
Average life after five years through ten years
2,650
2,585
7.0
3.90
Average life after ten years
459
448
11.1
4.70
Total
$
4,008
3,918
6.7
3.98 %
Asset-backed securities and other debt securities:
Average life after ten years
2
2
10.8
8.02
Total
$
2
2
10.8
8.02 %
Total held-to-maturity securities
$
11,278
10,965
6.9
3.41 %
(a)
Taxable-equivalent yield adjustments included in the above table are 0.01%, 0.02%, 0.60% and 0.08% for securities with an average life between 1 and 5 years,
average life between 5 and 10 years, average life greater than 10 years and in total, respectively.
(b)
Includes a discount of $865 at December 31, 2024 pertaining to the unamortized portion of unrealized losses on HTM securities.
Other Short-Term Investments
Other short-term investments have original maturities less than one year and primarily include interest-bearing balances that are funds on
deposit at the FRB or other depository institutions. The Bancorp uses other short-term investments as part of its liquidity risk management
tools. Other short-term investments were $17.1 billion at December 31, 2024, a decrease of $5.0 billion from December 31, 2023. This
decrease was primarily associated with an increase in loans and leases, a decrease in retail brokered CDs and a decrease in total borrowings
during the year ended December 31, 2024.
Deposits
The Bancorp’s deposit balances represent an important source of funding and revenue growth opportunity. The Bancorp continues to focus on
core deposit growth in its retail and commercial franchises by improving customer satisfaction, building full relationships and offering
competitive rates and through its strategy of expanding retail presence in high-growth markets, such as in the Southeast. Average core
deposits represented 77% and 76% of average total assets for the years ended December 31, 2024 and 2023, respectively.
The following table presents the end of period components of deposits:
TABLE 25: Components of Deposits
As of December 31 ($ in millions)
2024
2023
Demand
$
41,038
43,146
Interest checking
59,159
57,257
Savings
17,147
18,215
Money market
36,605
34,374
Foreign office
147
162
Total transaction deposits
154,096
153,154
CDs $250,000 or less
10,798
10,552
Total core deposits
164,894
163,706
CDs over $250,000(a)
2,358
5,206
Total deposits
$
167,252
168,912
(a)
Includes $1.3 billion and $4.4 billion of retail brokered CDs which are fully covered by FDIC insurance as of December 31, 2024 and 2023, respectively.
Core deposits increased $1.2 billion, or 1%, from December 31, 2023 primarily due to increases in transaction deposits and CDs $250,000 or
less. Transaction deposits increased $942 million, or 1%, from December 31, 2023 primarily driven by increases in money market deposits
and interest checking deposits, partially offset by decreases in demand deposits and savings deposits. In response to the higher interest rate
environment, deposit balances have migrated from noninterest-bearing products or lower interest-bearing products into higher interest-
bearing products. Money market deposits increased $2.2 billion, or 6%, from December 31, 2023 primarily as a result of higher balances per
consumer customer account due to higher offering rates and the aforementioned balance migration. Interest checking deposits increased $1.9
billion, or 3%, from December 31, 2023 primarily as a result of the aforementioned balance migration as well as commercial balance growth,
partially offset by lower balances per consumer customer account. Demand deposits decreased $2.1 billion, or 5%, from December 31, 2023
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
73 Fifth Third Bancorp
primarily as a result of the aforementioned balance migration and lower balances per commercial customer account, partially offset by higher
balances per consumer customer account. Savings deposits decreased $1.1 billion, or 6%, from December 31, 2023 primarily due to lower
balances per consumer customer account, driven by increased consumer spending and the impact of consumer preferences for products with
higher offering rates. CDs $250,000 or less increased $246 million, or 2%, from December 31, 2023 primarily due to new issuances which
outpaced maturities given higher offering rate.
CDs over $250,000 decreased $2.8 billion, or 55% from December 31, 2023 primarily due to maturities of retail brokered CDs.
The following table presents the components of average deposits for the years ended December 31:
TABLE 26: Components of Average Deposits
($ in millions)
2024
2023
Demand
$
40,314
46,195
Interest checking
58,599
52,378
Savings
17,594
20,872
Money market
36,165
30,943
Foreign office
158
158
Total transaction deposits
152,830
150,546
CDs $250,000 or less
10,537
8,298
Total core deposits
163,367
158,844
CDs over $250,000(a)
4,069
5,332
Total average deposits
$
167,436
164,176
(a)
Includes $3.1 billion and $4.7 billion of retail brokered CDs which are fully covered by FDIC insurance for the years ended December 31, 2024 and 2023,
respectively.
On an average basis, core deposits increased $4.5 billion, or 3%, from December 31, 2023 due to increases in average transaction deposits
and average CDs $250,000 or less. Average transaction deposits increased $2.3 billion, or 2%, from December 31, 2023, primarily driven by
increases in average interest checking deposits and average money market deposits, partially offset by decreases in average demand deposits
and average savings deposits. Average CDs $250,000 or less increased $2.2 billion, or 27%, from December 31, 2023. Additionally, average
CDs over $250,000 decreased $1.3 billion, or 24%, from December 31, 2023. The fluctuations in the average balances of deposits were
driven by similar factors to those previously discussed with respect to the end of period balances.
Contractual maturities
The contractual maturities of CDs as of December 31, 2024 are summarized in the following table:
TABLE 27: Contractual Maturities of CDs(a)
($ in millions)
Next 12 months
$
12,490
13-24 months
611
25-36 months
28
37-48 months
9
49-60 months
15
After 60 months
3
Total CDs
$
13,156
(a)
Includes CDs $250,000 or less and CDs over $250,000.
Deposit insurance
The FDIC generally provides a standard amount of insurance of $250,000 per depositor, per insured bank, for each account ownership
category defined by the FDIC. Depositors may qualify for coverage of accounts over $250,000 if they have funds in different ownership
categories and all FDIC requirements are met. All deposits that an account owner has in the same ownership category at the same bank are
added together and insured up to the standard insurance amount. As of December 31, 2024 and 2023, approximately $100.6 billion, or 60%,
and $97.6 billion, or 58%, respectively, of the Bancorp’s domestic deposits were estimated to be insured. As of December 31, 2024 and 2023,
approximately $66.5 billion and $71.1 billion, respectively, of the Bancorp’s domestic deposits were estimated to be uninsured. At
December 31, 2024 and 2023, approximately $1.1 billion and $1.9 billion, respectively, of time deposits were estimated to be uninsured.
Where information is not readily available to determine the amount of insured deposits, the amount of uninsured deposits is estimated,
consistent with the methodologies and assumptions utilized in providing information to the Bank’s regulators.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
74 Fifth Third Bancorp
Borrowings
The Bancorp accesses a variety of short-term and long-term funding sources. Borrowings with original maturities of one year or less are
classified as short-term and include federal funds purchased and other short-term borrowings. Total average borrowings as a percent of
average interest-bearing liabilities were 13% and 14% for the years ended December 31, 2024 and 2023, respectively.
The following table summarizes the end of period components of borrowings:
TABLE 28: Components of Borrowings
As of December 31 ($ in millions)
2024
2023
Federal funds purchased
$
204
193
Other short-term borrowings
4,450
2,861
Long-term debt
14,337
16,380
Total borrowings
$
18,991
19,434
Total borrowings decreased $443 million, or 2%, from December 31, 2023 primarily due to a decrease in long-term debt partially offset by an
increase in other short-term borrowings. Long-term debt decreased $2.0 billion from December 31, 2023 primarily due to redemptions or
maturities of $3.3 billion of notes, $496 million of paydowns associated with loan securitizations and $65 million of fair value adjustments
associated with hedged long-term debt. These decreases were partially offset by the issuances of senior fixed-rate/floating-rate notes in
January and September of 2024 totaling $1.8 billion during the year ended December 31, 2024. For additional information regarding the
long-term debt issuances, refer to Note 17 of the Notes to Consolidated Financial Statements. Other short-term borrowings increased $1.6
billion from December 31, 2023 primarily due to increased funding needs resulting from loan growth and a decrease in retail brokered CDs.
The level of other short-term borrowings can fluctuate significantly from period to period depending on funding needs and the sources that
are used to satisfy those needs. For further information on the components of other short-term borrowings, refer to Note 16 of the Notes to
Consolidated Financial Statements.
The following table summarizes the components of average borrowings:
TABLE 29: Components of Average Borrowings
For the years ended December 31 ($ in millions)
2024
2023
Federal funds purchased
$
207
307
Other short-term borrowings
3,024
5,044
Long-term debt
15,835
14,260
Total average borrowings
$
19,066
19,611
Total average borrowings decreased $545 million, or 3%, compared to December 31, 2023 primarily due to a decrease in average other short-
term borrowings, partially offset by an increase in average long-term debt. Average other short-term borrowings decreased $2.0 billion
compared to December 31, 2023 primarily due to lower FHLB advances outstanding. Average long-term debt increased $1.6 billion
compared to December 31, 2023 primarily due to the issuances of senior fixed-rate/floating-rate notes in January and September of 2024
totaling $1.8 billion and fluctuations within the year in the amount of long-term FHLB advances outstanding. These increases were partially
offset by redemptions or maturities of $3.3 billion of notes, $496 million of paydowns associated with loan securitizations and $65 million of
fair value adjustments associated with hedged long-term debt during the year ended December 31, 2024. Information on the average rates
paid on borrowings is discussed in the Net Interest Income subsection of the Statements of Income Analysis section of MD&A. In addition,
refer to the Liquidity Risk Management subsection of the Risk Management section of MD&A for a discussion on the role of borrowings in
the Bancorp’s liquidity management.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
75 Fifth Third Bancorp
RISK MANAGEMENT – OVERVIEW
Effective risk management is critical to the Bancorp’s ongoing success and ensures that the Bancorp operates in a safe and sound manner,
complies with applicable laws and regulations and safeguards the Bancorp’s brand and reputation. Risks are inherent in the Bancorp’s
business and are influenced by both internal and external factors. The Bancorp is responsible for managing these risks effectively to deliver
through-the-cycle value and performance for the Bancorp’s shareholders, customers, employees and communities.
Fifth Third’s Enterprise Risk Management Framework, which is approved annually by the ERMC, RCC and the Board of Directors, includes
the following key elements:
•
The Bancorp ensures transparency of risk through defined risk policies, governance and a reporting structure that includes the RCC,
ERMC and other risk-specific management committees and councils.
•
The Bancorp establishes a risk appetite in alignment with its strategic, financial and capital plans at the enterprise level and the line
of business level. Risk appetite is defined using quantitative metrics and qualitative measures to ensure prudent risk taking that
drives balanced decision making. The Bancorp’s goal is to ensure that aggregate residual risks do not exceed the Bancorp’s risk
appetite, and that risks taken are supportive of the Bancorp’s portfolio diversification and profitability objectives. The Board and
executive management approve the risk appetite, which is considered in the development of business strategies and forms the basis
for enterprise risk management.
•
The core principles that define the Bancorp’s risk appetite are as follows:
◦
Conduct the Bancorp’s business in compliance with all applicable laws, rules and regulations and in alignment with
internal policies and procedures.
◦
Act with integrity in all activities.
◦
Understand the risks taken and ensure that they are in alignment with the Bancorp’s business strategies and risk appetite.
◦
Avoid risks that cannot be understood, managed or monitored.
◦
Provide transparency of risk to the Bancorp’s management and Board by escalating risks and issues as necessary.
◦
Ensure Fifth Third’s products and services are designed, delivered and maintained to provide value and benefit to the
Bancorp’s customers and to Fifth Third.
◦
Only offer products or services that are appropriate or suitable for the Bancorp’s customers.
◦
Focus on providing operational excellence by providing reliable, accurate and efficient services to meet customers’ needs.
◦
Maintain a strong financial position to ensure the Bancorp meets its strategic objectives through all economic cycles and is
able to access the capital markets at all times, even under stressed conditions.
◦
Protect the Bancorp’s reputation by thoroughly understanding the consequences of business strategies, products and
processes.
•
Fifth Third’s culture and values provide the foundation for supporting sound risk management practices by setting expectations for
appropriate conduct and accountability across the organization. All employees are expected to conduct themselves in alignment with
Fifth Third’s Code of Business Conduct and Ethics, which may be found on www.53.com, while carrying out their responsibilities.
Fifth Third’s Management Compliance Committee provides oversight of business conduct policies, programs and strategies, and
monitors reporting of potential misconduct, trends or themes across the enterprise. Prudent risk management is a responsibility that
is expected from all employees and is a foundational element of Fifth Third’s culture.
•
The Bancorp manages eight defined risk types to a prescribed appetite. The risk types are credit risk, liquidity risk, interest rate risk,
price risk, legal and regulatory compliance risk, operational risk, reputation risk and strategic risk.
•
The Bancorp identifies and monitors existing and potential risks that may impact the company’s risk profile, including emerging
risks that create uncertainties and/or would have broad implications if materialized (e.g., contagion risks, climate change, etc.).
Enhanced monitoring and action plans are implemented as necessary to proactively mitigate risk.
•
Fifth Third’s Risk Management Process provides a consistent and integrated approach for managing risks. The five components of
the Risk Management Process are: identify, assess, manage, monitor and report. The Bancorp has also established processes and
programs to manage and report concentration risks, to ensure robust talent, performance and compensation management, and to
aggregate risks across the enterprise.
Fifth Third drives accountability for managing risk through its Three Lines of Defense structure:
•
The first line of defense is comprised of front-line units (and enterprise-wide functions that support front-line units) that create risk
or are involved in risk-taking activities and are accountable for managing risk. These groups are the Bancorp’s primary risk takers
and are responsible for implementing effective internal controls and maintaining processes for identifying, assessing, managing,
monitoring and reporting on the risks associated with their activities consistent with established risk appetite and limits.
•
The second line of defense, or Independent Risk Management, consists of Enterprise and Non-Financial Risk Management, Capital
Markets Risk Management, Compliance, Financial Crimes, Model Risk Management, Credit Risk Management and Credit Risk
Review. The second line is responsible for developing enterprise frameworks and policies to govern risk-taking activities, providing
challenge and oversight of those activities, advising on controlling risk, assessing risks and issues independent of the first line of
defense, and providing input on key risk decisions. Risk Management complements the front line’s management of risk-taking
activities through its monitoring and reporting responsibilities, including adherence to the Bancorp Risk Appetite. Additionally, the
second line of defense is responsible for identifying, assessing, managing, monitoring and reporting on aggregate risks enterprise-
wide.
•
The third line of defense is Internal Audit, which provides oversight of the first and second lines of defense, and independent
assurance to the Board on the effectiveness of governance, risk management and internal controls.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
76 Fifth Third Bancorp
CREDIT RISK MANAGEMENT
Credit risk management utilizes a framework that encompasses consistent processes for identifying, assessing, managing, monitoring and
reporting credit risk. These processes are supported by a credit risk governance structure that includes Board oversight, policies, risk limits
and risk committees.
The objective of the Bancorp’s credit risk management strategy is to quantify and manage credit risk on an aggregate portfolio basis, as well
as to limit the risk of loss resulting from the failure of a borrower or counterparty to honor its financial or contractual obligations to the
Bancorp. The Bancorp’s credit risk management strategy is based on three core principles: conservatism, diversification and monitoring. The
Bancorp believes that effective credit risk management begins with conservative lending practices which are described below. These
practices include the use of intentional risk-based limits for single name exposures and counterparty selection criteria designed to reduce or
eliminate exposure to borrowers who have higher than average default risk and defined weaknesses in financial performance. The Bancorp
carefully designs and monitors underwriting, documentation and collection standards. The Bancorp’s credit risk management strategy also
emphasizes diversification on a geographic, industry, product and customer level as well as ongoing portfolio monitoring and timely
management reviews of large credit exposures and credits experiencing deterioration of credit quality. Credit officers with the authority to
extend credit are delegated specific authority based on risk and exposure amount, the use of which is closely monitored. Underwriting
activities are centrally managed, and Credit Risk Management manages the policy and the authority delegation process directly. The Credit
Risk Review function provides independent and objective assessments of the quality of underwriting and documentation, the accuracy of risk
ratings and the charge-off, nonaccrual and reserve analysis process. The Bancorp’s credit review process and overall assessment of the
adequacy of the ACL is based on quarterly assessments of the estimated losses expected in the loan and lease portfolio. The Bancorp uses
these assessments to maintain an adequate ACL and record any necessary charge-offs. Certain loans and leases with probable or observed
credit weaknesses receive enhanced monitoring and undergo a periodic review. Refer to Note 6 of the Notes to Consolidated Financial
Statements for further information on the Bancorp’s credit rating categories, which are derived from standard regulatory rating definitions. In
addition, stress testing is performed on various commercial and consumer portfolios utilizing various models. For certain portfolios, such as
real estate and leveraged lending, stress testing is performed at the individual loan level during credit underwriting.
In addition to the individual review of larger commercial loans that exhibit probable or observed credit weaknesses, the commercial credit
review process includes the use of two risk rating systems. The first of these risk rating systems is based on regulatory guidance for credit risk
rating systems. These ratings are used by the Bancorp to monitor and manage its credit risk. The Bancorp also separately maintains a dual risk
rating system for credit approval and pricing, portfolio monitoring and capital allocation that includes a “through-the-cycle” rating philosophy
for assessing a borrower’s creditworthiness. This “through-the-cycle” rating philosophy uses a grading scale that assigns ratings based on
average default rates through an entire business cycle for borrowers with similar financial performance. The dual risk rating system includes
thirteen categories for estimating probabilities of default and an additional eleven categories for estimating losses given an event of default.
The probability of default and loss given default evaluations are not separated in the regulatory risk rating system.
The Bancorp utilizes internally developed models to estimate expected credit losses for portfolio loans and leases. For loans and leases that
are collectively evaluated, the Bancorp utilizes these models to forecast expected credit losses over a reasonable and supportable forecast
period based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss
percentage given a default. Refer to Note 1 of the Notes to Consolidated Financial Statements for additional information about the Bancorp’s
processes for developing these models, for estimating credit losses for periods beyond the reasonable and supportable forecast period and for
estimating credit losses for individually evaluated loans.
For the commercial portfolio segment, the estimated probabilities of default are primarily based on the probability of default ratings assigned
under the dual risk rating system and historical observations of how those ratings migrate to a default over time in the context of
macroeconomic conditions. For loans with available credit, the estimate of the expected balance at the time of default considers expected
utilization rates, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those
economic conditions. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those
characteristics to changes in macroeconomic conditions.
For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models
primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the
probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those
characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also especially impactful in
the expected credit loss models for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity)
and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected
balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on
macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. The Bancorp also utilizes
various scoring systems, analytical tools and portfolio performance monitoring processes to assess the credit risk of the consumer and
residential mortgage portfolios.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
77 Fifth Third Bancorp
Commercial Portfolio
The Bancorp’s credit risk management strategy seeks to minimize concentrations of risk through diversification. The Bancorp has
commercial loan concentration limits based on industry, lines of business within the commercial segment, geography and credit product type.
The risk within the commercial loan and lease portfolio is managed and monitored through an underwriting process utilizing detailed
origination policies, continuous loan level reviews, monitoring of industry concentration and product type limits and continuous portfolio risk
management reporting.
The Bancorp is closely monitoring various economic factors and their impacts on commercial borrowers, including, but not limited to, the
level of inflation, labor and supply chain issues, volatility and changes in consumer discretionary spending patterns, including debt and
default levels. Additionally, despite recent cuts, borrowers are expected to experience lingering effects from higher-for-longer interest rates.
The Bancorp maintains focus on disciplined client selection, adherence to underwriting policy and attention to concentrations.
The Bancorp provides loans to a variety of customers ranging from large multinational firms to middle market businesses, sole proprietors
and high net worth individuals. The origination policies for commercial loans and leases outline the risks and underwriting requirements for
businesses in various industries. Included in the policies are maturity and amortization terms, collateral and leverage requirements, cash flow
coverage measures and hold limits. The Bancorp aligns credit and sales teams with specific industry and regional expertise to better monitor
and manage different industry and geographic segments of the portfolio.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
78 Fifth Third Bancorp
The following table provides detail on commercial loans and leases by industry classification (as defined by the North American Industry
Classification System), by loan size and by state, illustrating the diversity and granularity of the Bancorp’s commercial loans and leases:
TABLE 30: Commercial Loan and Lease Portfolio (excluding loans and leases held for sale)
2024
2023
As of December 31 ($ in millions)
Outstanding
Exposure
Nonaccrual
Outstanding
Exposure
Nonaccrual
By Industry:
Real estate
$
14,375
22,429
6
$
12,558
19,679
4
Financial services and insurance
9,507
19,939
1
9,998
21,022
—
Manufacturing
8,850
19,230
68
9,010
19,101
54
Healthcare
5,648
8,192
76
5,485
7,831
13
Business services
5,596
9,755
113
5,917
10,339
50
Wholesale trade
5,315
10,305
14
5,259
10,414
6
Accommodation and food
4,371
6,731
18
4,326
6,946
25
Retail trade
3,495
8,429
45
3,953
9,847
85
Communication and information
3,304
6,140
74
3,191
6,482
60
Mining
2,676
5,897
—
2,813
5,940
—
Construction
2,674
6,815
19
2,656
6,391
10
Transportation and warehousing
2,311
4,124
7
2,382
4,326
5
Utilities
1,882
3,326
—
1,850
3,493
—
Entertainment and recreation
1,749
3,091
5
1,687
2,964
8
Other services
1,215
1,798
5
1,181
1,680
6
Agribusiness
204
513
5
300
614
—
Public administration
110
160
—
151
240
—
Individuals
11
24
—
29
77
—
Total
$
73,293
136,898
456
$
72,746
137,386
326
By Loan Size:
Less than $1 million
5 %
5
15
4 %
4
19
$1 million to $5 million
7
5
10
7
6
11
$5 million to $10 million
4
4
6
5
4
5
$10 million to $25 million
13
11
22
14
11
23
$25 million to $50 million
24
22
33
24
23
—
Greater than $50 million
47
53
14
46
52
42
Total
100 %
100
100
100
100
100
By State:
California
10 %
8
6
10 %
8
5
Illinois
8
8
5
9
8
5
Texas
8
9
1
9
9
1
Ohio
8
10
3
8
11
6
Florida
7
6
8
7
7
35
New York
7
6
12
7
6
—
Michigan
5
5
6
5
5
3
Georgia
4
4
16
4
4
21
Indiana
3
4
2
3
3
1
Tennessee
3
3
10
3
3
1
North Carolina
3
3
1
3
3
2
South Carolina
3
2
—
2
2
1
Other
31
32
30
30
31
19
Total
100 %
100
100
100
100
100
The origination policies for commercial real estate outline the risks and underwriting requirements for owner and nonowner-occupied and
construction lending. Included in the policies are maturity and amortization terms, maximum LTVs, minimum debt service coverage ratios,
construction loan monitoring procedures, appraisal requirements, pre-leasing requirements (as applicable), pro forma analysis requirements
and interest rate sensitivity. The Bancorp requires a valuation of real estate collateral, which may include third-party appraisals, be performed
at the time of origination and renewal in accordance with regulatory requirements and on an as-needed basis when market conditions justify.
The Bancorp maintains an appraisal review department to order and review third-party appraisals in accordance with regulatory requirements.
Nonaccrual assets with relationships exceeding $1 million are reviewed quarterly to assess the appropriateness of the value ascribed in the
assessment of charge-offs and specific reserves. Additionally, collateral values are also reviewed at least annually for all criticized assets.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
79 Fifth Third Bancorp
The Bancorp assesses all real estate and non-real estate collateral securing a loan and considers all cross-collateralized loans in the calculation
of the LTV ratio. The following tables provide detail on the most recent LTV ratios for commercial mortgage loans greater than $1 million,
excluding commercial mortgage loans that are individually evaluated for an ACL and loans which do not have real estate as the primary
collateral. The Bancorp does not typically aggregate the LTV ratios for commercial mortgage loans less than $1 million.
TABLE 31: Commercial Mortgage Loans Outstanding by LTV, Loans Greater Than $1 Million
As of December 31, 2024 ($ in millions)
LTV > 100%
LTV 80-100%
LTV < 80%
Commercial mortgage owner-occupied loans
$
53
137
3,753
Commercial mortgage nonowner-occupied loans
—
288
5,615
Total
$
53
425
9,368
TABLE 32: Commercial Mortgage Loans Outstanding by LTV, Loans Greater Than $1 Million
As of December 31, 2023 ($ in millions)
LTV > 100%
LTV 80-100%
LTV < 80%
Commercial mortgage owner-occupied loans
$
53
258
3,257
Commercial mortgage nonowner-occupied loans
1
29
5,121
Total
$
54
287
8,378
The Bancorp views nonowner-occupied commercial real estate as a higher credit risk product compared to some other commercial loan
portfolios due to the higher volatility of the industry.
The following tables provide an analysis of nonowner-occupied commercial real estate loans, disaggregated by property location (excluding
loans held for sale):
TABLE 33: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale)(a)
As of December 31, 2024 ($ in millions)
Outstanding
Exposure
90 Days
Past Due
Nonaccrual
By State:
Florida
$
1,543
2,526
—
—
Illinois
1,123
1,275
—
2
California
1,080
1,714
—
—
Texas
905
1,714
—
2
Ohio
835
1,231
—
1
Michigan
775
926
—
—
South Carolina
699
763
—
—
North Carolina
572
782
—
—
New York
468
524
—
—
Georgia
429
842
—
—
All other states
2,801
3,929
—
—
Total
$
11,230
16,226
—
5
(a)
Included in commercial mortgage loans and commercial construction loans in the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
80 Fifth Third Bancorp
TABLE 34: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale)(a)
As of December 31, 2023 ($ in millions)
Outstanding
Exposure
90 Days
Past Due
Nonaccrual
By State:
Florida
$
1,449
2,755
—
—
Illinois
912
1,037
—
2
California
1,354
2,111
—
—
Texas
637
1,304
—
—
Ohio
862
1,085
—
—
Michigan
729
1,038
—
—
South Carolina
460
572
—
—
North Carolina
397
575
—
1
New York
339
380
—
—
Georgia
331
627
—
—
All other states
3,262
4,732
—
—
Total
$
10,732
16,216
—
3
(a)
Included in commercial mortgage loans and commercial construction loans in the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A.
Net charge-offs on nonowner-occupied commercial real estate loans were immaterial for the year ended December 31, 2024 and net
recoveries were $3 million for the year ended December 31, 2023.
Consumer Portfolio
The Bancorp’s consumer portfolio is materially comprised of six categories of loans: residential mortgage loans, home equity, indirect
secured consumer loans, credit card, solar energy installation loans and other consumer loans. The Bancorp has identified certain credit
characteristics within these six categories of loans which it believes represent a higher level of risk compared to the rest of the consumer loan
portfolio. The Bancorp does not update LTVs for the consumer portfolio subsequent to origination except as part of the charge-off process for
real estate secured loans. The Bancorp actively manages the consumer portfolio through concentration limits, which mitigate credit risk
through limiting the exposure to lower FICO scores, higher LTVs, specific geographic concentration risks and additional risk elements.
The Bancorp continues to ensure that underwriting standards and guidelines adequately account for the broader economic conditions that the
consumer portfolio faces in a high-rate environment and as rates begin to fall. Guidelines are designed to ensure that the various consumer
products fall within the Bancorp’s risk appetite. These guidelines are monitored and adjusted as deemed appropriate in response to the
prevailing economic conditions while remaining within the Bancorp’s risk tolerance limits.
The payment structures for certain variable rate products (such as residential mortgage loans, home equity and credit card) are susceptible to
changes in benchmark interest rates. Previous increases in interest rates have caused minimum payments on these products to increase, raising
the potential for the environment to be disruptive to some borrowers. Recent rate cuts and potential future decreases in interest rates may
lessen these risks moving forward. The impacts of these rate changes will take time to manifest and their significance will be dependent on
the size and number of current and future rate cuts. The Bancorp actively monitors the portion of its consumer portfolio that is susceptible to
changes in minimum payments and continues to assess the impact on the overall risk appetite and soundness of the portfolio.
Residential mortgage portfolio
The Bancorp manages credit risk in the residential mortgage portfolio through underwriting guidelines that limit exposure to loan
characteristics determined to influence credit risk. Additionally, the portfolio is governed by concentration limits that ensure product and
channel diversification. The Bancorp may also package and sell loans in the portfolio.
The Bancorp does not originate residential mortgage loans that permit customers to make payments that are less than the accruing interest.
The Bancorp originates both fixed-rate and ARM loans. Within the ARM portfolio, approximately $458 million of ARM loans will have rate
resets during the next twelve months. Underlying characteristics of these borrowers are strong with a weighted-average origination debt-to-
income ratio of 34% and weighted-average origination LTV of 72%. Approximately 43% of these loans are expected to experience an
increase in rate upon reset. For those borrowers, rates are expected to increase by an average of approximately 1.9%, resulting in an average
increase in monthly payment amount of approximately 26%.
Certain residential mortgage products have characteristics that may increase the Bancorp’s credit loss rates in the event of a decline in
housing values. These types of mortgage products offered by the Bancorp include loans with high LTVs, multiple loans secured by the same
collateral that when combined result in an LTV greater than 80% and interest-only loans. The Bancorp has deemed residential mortgage loans
with greater than 80% LTVs and no mortgage insurance as loans that represent a higher level of risk. Approximately two-thirds of these loans
consist of loans originated through the Bancorp’s loan program for doctors.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
81 Fifth Third Bancorp
The following table provides an analysis of the residential mortgage portfolio loans outstanding by LTV at origination:
TABLE 35: Residential Mortgage Portfolio Loans by LTV at Origination
2024
2023
As of December 31 ($ in millions)
Outstanding
Weighted-
Average LTV
Outstanding
Weighted-
Average LTV
LTV ≤ 80%
$
11,836
63.5 % $
11,718
62.7 %
LTV > 80%, with mortgage insurance(a)
3,165
95.5
2,996
95.1
LTV > 80%, no mortgage insurance
2,542
90.9
2,312
91.1
Total
$
17,543
73.5 % $
17,026
72.4 %
(a)
Includes loans with either borrower or lender paid mortgage insurance.
The following tables provide an analysis of the residential mortgage portfolio loans outstanding by state with a greater than 80% LTV at
origination and no mortgage insurance:
TABLE 36: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of December 31, 2024 ($ in millions)
Outstanding
90 Days Past Due
and Accruing
Nonaccrual
By State:
Ohio
$
518
1
7
Illinois
518
—
5
Florida
457
—
2
North Carolina
202
—
—
Michigan
167
—
2
Indiana
165
—
2
Kentucky
130
—
1
All other states
385
—
5
Total
$
2,542
1
24
TABLE 37: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of December 31, 2023 ($ in millions)
Outstanding
90 Days Past Due
and Accruing
Nonaccrual
By State:
Ohio
$
512
—
8
Illinois
462
1
4
Florida
407
—
1
North Carolina
163
—
1
Michigan
167
—
1
Indiana
166
—
2
Kentucky
123
—
1
All other states
312
—
5
Total
$
2,312
1
23
Net charge-offs on residential mortgage loans with an LTV greater than 80% at origination and no mortgage insurance were immaterial for
the year ended December 31, 2024 and there were net recoveries of $1 million for the year ended December 31, 2023.
Home equity portfolio
The Bancorp’s home equity portfolio of $4.2 billion is primarily comprised of home equity lines of credit. Beginning in the first quarter of
2013, the Bancorp’s newly originated home equity lines of credit have a 10-year interest-only draw period followed by a 20-year amortization
period. The home equity line of credit previously offered by the Bancorp was a revolving facility with a 20-year term, minimum payments of
interest-only and a balloon payment of principal at maturity. Approximately 21% of the outstanding balances of the Bancorp’s portfolio of
home equity lines of credit have a balloon structure at maturity. Peak maturity years for the balloon home equity lines of credit are 2025 to
2028 and approximately $594 million of the balances mature before December 31, 2028.
The home equity portfolio is managed in two primary groups: loans outstanding with a combined LTV greater than 80% and those loans with
an LTV of 80% or less based upon appraisals at origination. For additional information on these loans, refer to Table 39, Table 40 and Table
41. Of the total $4.2 billion of outstanding home equity loans:
•
74% reside within the Bancorp’s Midwest footprint of Ohio, Michigan, Illinois, Indiana and Kentucky as of December 31, 2024;
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
82 Fifth Third Bancorp
•
74% of non-delinquent borrowers made at least one payment greater than the minimum payment during the year ended
December 31, 2024; and
•
The portfolio had a weighted-average refreshed FICO score of 748 at December 31, 2024.
The Bancorp actively manages lines of credit and makes adjustments in lending limits when it believes it is necessary based on FICO score
deterioration and property devaluation. The Bancorp does not routinely obtain appraisals on performing loans to update LTVs after
origination. However, the Bancorp monitors the local housing markets by reviewing various home price indices and incorporates the impact
of the changing market conditions in its ongoing credit monitoring processes.
The following table provides an analysis of home equity portfolio loans outstanding disaggregated based upon refreshed FICO score:
TABLE 38: Home Equity Portfolio Loans Outstanding by Refreshed FICO Score
2024
2023
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
Senior Liens:
FICO ≤ 659
$
111
3 % $
109
2 %
FICO 660-719
160
4
187
5
FICO ≥ 720
1,013
24
1,052
27
Total senior liens
$
1,284
31 % $
1,348
34 %
Junior Liens:
FICO ≤ 659
242
6
218
6
FICO 660-719
521
12
460
12
FICO ≥ 720
2,141
51
1,890
48
Total junior liens
$
2,904
69 % $
2,568
66 %
Total
$
4,188
100 % $
3,916
100 %
The Bancorp believes that home equity portfolio loans with a greater than 80% LTV (including senior liens, if applicable) present a higher
level of risk. The following table provides an analysis of the home equity portfolio loans outstanding in a senior and junior lien position by
LTV at origination:
TABLE 39: Home Equity Portfolio Loans Outstanding by LTV at Origination
2024
2023
As of December 31 ($ in millions)
Outstanding
Weighted-
Average LTV
Outstanding
Weighted-
Average LTV
Senior Liens:
LTV ≤ 80%
$
1,147
49.8 % $
1,194
50.8 %
LTV > 80%
137
89.1
154
88.9
Total senior liens
$
1,284
54.2 % $
1,348
55.4 %
Junior Liens:
LTV ≤ 80%
2,085
64.3
1,768
64.9
LTV > 80%
819
88.2
800
88.7
Total junior liens
$
2,904
71.3 % $
2,568
72.7 %
Total
$
4,188
66.0 % $
3,916
66.7 %
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
83 Fifth Third Bancorp
The following tables provide an analysis of home equity portfolio loans outstanding by state with an LTV greater than 80% (including senior
liens, if applicable) at origination:
TABLE 40: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of December 31, 2024 ($ in millions)
Outstanding
Exposure
90 Days
Past Due and Accruing
Nonaccrual
By State:
Ohio
$
283
761
—
7
Illinois
140
337
—
5
Michigan
131
358
—
3
Indiana
103
251
—
3
Florida
96
214
—
2
Kentucky
77
196
—
2
All other states
126
310
—
3
Total
$
956
2,427
—
25
TABLE 41: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of December 31, 2023 ($ in millions)
Outstanding
Exposure
90 Days Past Due and
Accruing
Nonaccrual
By State:
Ohio
$
290
808
—
6
Illinois
145
346
1
4
Michigan
140
394
—
2
Indiana
96
252
—
2
Florida
86
206
—
2
Kentucky
81
211
—
1
All other states
116
304
—
3
Total
$
954
2,521
1
20
Net recoveries on home equity loans with an LTV greater than 80% at origination were $2 million and $1 million for the years ended
December 31, 2024 and 2023, respectively.
Indirect secured consumer portfolio
The indirect secured consumer portfolio is comprised of $13.3 billion of automobile loans and $3.0 billion of indirect recreational vehicle,
marine, motorcycle and powersport loans as of December 31, 2024. All concentration and guideline changes are monitored monthly to ensure
alignment with original credit performance and return projections.
The following table provides an analysis of indirect secured consumer portfolio loans outstanding disaggregated based upon FICO score at
origination:
TABLE 42: Indirect Secured Consumer Portfolio Loans Outstanding by FICO Score at Origination
2024
2023
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
FICO ≤ 659
$
177
1 % $
189
1 %
FICO 660-719
3,040
19
3,075
21
FICO ≥ 720
13,096
80
11,701
78
Total
$
16,313
100 % $
14,965
100 %
It is a common industry practice to advance on these types of loans an amount in excess of the collateral value due to the inclusion of
negative equity trade-in, maintenance/warranty products, taxes, title and other fees paid at closing. The Bancorp monitors its exposure to
these higher risk loans.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
84 Fifth Third Bancorp
The following table provides an analysis of indirect secured consumer portfolio loans outstanding by LTV at origination:
TABLE 43: Indirect Secured Consumer Portfolio Loans Outstanding by LTV at Origination
2024
2023
As of December 31 ($ in millions)
Outstanding
Weighted-
Average LTV
Outstanding
Weighted-
Average LTV
LTV ≤ 100%
$
11,822
79.8 % $
10,976
79.6 %
LTV > 100%
4,491
110.1
3,989
110.2
Total
$
16,313
88.1 % $
14,965
87.7 %
At December 31, 2024 and 2023, $24 million and $18 million, respectively, of the Bancorp’s nonaccrual indirect secured consumer portfolio
loans had an LTV greater than 100% at origination. Net charge-offs on indirect secured consumer loans with an LTV greater than 100% at
origination were $40 million for both the years ended December 31, 2024 and 2023.
Credit card portfolio
The credit card portfolio consists of predominantly prime accounts with 98% of balances existing within the Bancorp’s footprint at both
December 31, 2024 and 2023. At December 31, 2024 and 2023, 72% and 71%, respectively, of the outstanding balances were originated
through branch-based relationships with the remainder coming from direct mail campaigns and online acquisitions.
Given the variable nature of the credit card portfolio, interest rate increases impact this product and it is regularly monitored to ensure the
portfolio remains within the Bancorp’s risk tolerance. Recent rate cuts and potential future decreases in interest rates may lessen these risks
moving forward.
The following table provides an analysis of the Bancorp’s outstanding credit card portfolio disaggregated based upon FICO score at
origination:
TABLE 44: Credit Card Portfolio Loans Outstanding by FICO Score at Origination
2024
2023
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
FICO ≤ 659
$
78
5 % $
75
4 %
FICO 660-719
470
27
503
27
FICO ≥ 720
1,186
68
1,287
69
Total
$
1,734
100 % $
1,865
100 %
Solar energy installation loans portfolio
The Bancorp originates point-of-sale solar energy installation loans through a network of approved installers. The Bancorp considers several
factors when monitoring its solar energy installation loan portfolio, including concentrations by installer, concentrations by state and FICO
distributions at origination. At both December 31, 2024 and 2023, loans originated through the Bancorp’s three largest approved installers
represented approximately 23% of total balances outstanding in the solar energy installation loan portfolio.
The following table provides an analysis of solar energy installation portfolio loans outstanding by state:
TABLE 45: Solar Energy Installation Loans Outstanding by State
2024
2023
As of December 31 ($ in millions)
Outstanding
Nonaccrual
Outstanding
Nonaccrual
By State:
Florida
$
675
16
680
16
California
562
8
565
5
Texas
501
7
457
8
Arizona
366
4
326
4
Virginia
229
1
190
1
Nevada
165
1
130
—
Oregon
165
—
109
—
Colorado
158
1
137
1
New York
118
—
90
—
Connecticut
103
3
87
3
All other states
1,160
23
957
22
Total
$
4,202
64
3,728
60
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
85 Fifth Third Bancorp
The following table provides an analysis of solar energy installation portfolio loans outstanding disaggregated based upon FICO score at
origination:
TABLE 46: Solar Energy Installation Loans Outstanding by FICO Score at Origination
2024
2023
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
FICO ≤ 659
$
5
— % $
6
— %
FICO 660-719
621
15
557
15
FICO ≥ 720
3,576
85
3,165
85
Total
$
4,202
100 % $
3,728
100 %
Other consumer loans portfolio
Other consumer portfolio loans are comprised of secured and unsecured loans originated through the Bancorp’s branch network, point-of-sale
home improvement loans originated through a network of contractors and installers, and other point-of-sale loans originated or purchased in
connection with third-party companies. Loans originated in connection with one third-party point-of-sale company are impacted by certain
credit loss protection coverage provided by that company. The Bancorp discontinued origination of new loans with this third-party company
in September 2022.
The following table provides an analysis of other consumer portfolio loans outstanding by product type:
TABLE 47: Other Consumer Portfolio Loans Outstanding by Product Type
2024
2023
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
Other secured
$
912
36 % $
892
30 %
Point-of-sale home improvement
623
25
809
27
Third-party point-of-sale
546
22
825
28
Unsecured
437
17
462
15
Total
$
2,518
100 % $
2,988
100 %
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
86 Fifth Third Bancorp
Analysis of Nonperforming Assets
Nonperforming assets include nonaccrual loans and leases for which ultimate collectability of the full amount of the principal and/or interest
is uncertain and certain other assets, including OREO and other repossessed property. A summary of nonperforming assets is included in
Table 48. For further information on the Bancorp’s policies related to accounting for delinquent and nonperforming loans and leases, refer to
the Nonaccrual Loans and Leases section of Note 1 of the Notes to Consolidated Financial Statements.
Nonperforming assets were $860 million at December 31, 2024 compared to $689 million at December 31, 2023. At December 31, 2024,
$7 million of nonaccrual loans were held for sale, compared to $1 million at December 31, 2023.
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.71% and 0.59% at December 31, 2024 and 2023,
respectively. Nonaccrual loans and leases secured by real estate were 35% of nonaccrual loans and leases as of December 31, 2024 compared
to 32% as of December 31, 2023.
Portfolio commercial nonaccrual loans and leases were $456 million at December 31, 2024, an increase of $130 million from December 31,
2023. Portfolio residential mortgage and consumer nonaccrual loans were $367 million at December 31, 2024, an increase of $44 million
from December 31, 2023. Refer to Table 49 for a rollforward of portfolio nonaccrual loans and leases.
OREO and other repossessed property was $30 million and $39 million at December 31, 2024 and 2023, respectively. The Bancorp
recognized losses of $2 million and $8 million on the transfer, sale or write-down of OREO properties during the years ended December 31,
2024 and 2023, respectively.
During the years ended December 31, 2024 and 2023, approximately $64 million and $54 million, respectively, of interest income would
have been recognized if the nonaccrual portfolio loans and leases had been current in accordance with their contractual terms. Although these
values help demonstrate the costs of carrying nonaccrual credits, the Bancorp does not expect to recover the full amount of interest as
nonaccrual loans and leases are generally carried below their principal balance.
TABLE 48: Summary of Nonperforming Assets and Delinquent Loans and Leases
As of December 31 ($ in millions)
2024
2023
Nonaccrual portfolio loans and leases:
Commercial and industrial loans
$
374
304
Commercial mortgage loans
79
20
Commercial construction loans
1
1
Commercial leases
2
1
Residential mortgage loans
137
124
Home equity
70
57
Indirect secured consumer loans
55
36
Credit card
32
34
Solar energy installation loans
64
60
Other consumer loans
9
12
Total nonaccrual portfolio loans and leases(a)
823
649
OREO and other repossessed property(c)
30
39
Total nonperforming portfolio assets
853
688
Nonaccrual loans held for sale
7
1
Total nonperforming assets
$
860
689
Total portfolio loans and leases 90 days past due and still accruing:
Commercial and industrial loans
$
5
8
Commercial leases
1
—
Residential mortgage loans(b)
6
7
Credit card
20
21
Total portfolio loans and leases 90 days past due and still accruing
$
32
36
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO
0.71 %
0.59
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases
0.69
0.55
ACL as a percent of nonperforming portfolio loans and leases
302
383
ACL as a percent of nonperforming portfolio assets
291
362
(a)
Includes $18 and $19 of nonaccrual government-insured commercial loans whose repayments are insured by the SBA as of December 31, 2024 and 2023,
respectively.
(b)
Information for all periods presented excludes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the
FHA or guaranteed by the VA. These advances were $163 and $141 as of December 31, 2024 and 2023, respectively. The Bancorp recognized losses of $1 and $2
for the years ended December 31, 2024 and 2023, respectively, due to claim denials and curtailments associated with these insured or guaranteed loans.
(c)
Includes $12 and $20 of branch-related real estate no longer intended to be used for banking purposes as of December 31, 2024 and 2023, respectively.
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
87 Fifth Third Bancorp
The following tables provide a rollforward of portfolio nonaccrual loans and leases, by portfolio segment:
TABLE 49: Rollforward of Portfolio Nonaccrual Loans and Leases
For the year ended December 31, 2024 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
Balance, beginning of period
$
326
124
199
649
Transfers to nonaccrual status
591
68
342
1,001
Transfers to accrual status
(2)
(24)
(51)
(77)
Transfers to held for sale
(13)
—
—
(13)
Loan paydowns/payoffs
(180)
(29)
(67)
(276)
Transfers to OREO
—
(6)
(17)
(23)
Charge-offs
(267)
—
(178)
(445)
Draws/other extensions of credit
1
4
2
7
Balance, end of period
$
456
137
230
823
TABLE 50: Rollforward of Portfolio Nonaccrual Loans and Leases
For the year ended December 31, 2023 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
Balance, beginning of period
$
263
124
128
515
Transfers to nonaccrual status
452
68
401
921
Transfers to accrual status
(59)
(29)
(85)
(173)
Transfers to held for sale
(10)
—
—
(10)
Loan paydowns/payoffs
(158)
(34)
(65)
(257)
Transfers to OREO
—
(9)
(12)
(21)
Charge-offs
(170)
—
(169)
(339)
Draws/other extensions of credit
8
4
1
13
Balance, end of period
$
326
124
199
649
Analysis of Net Loan Charge-offs
Net charge-offs were 45 bps and 32 bps of average portfolio loans and leases for the years ended December 31, 2024 and 2023, respectively.
Table 51 provides a summary of credit loss experience and net charge-offs as a percent of average portfolio loans and leases outstanding by
loan category.
The ratio of commercial loan and lease net charge-offs as a percent of average portfolio commercial loans and leases increased to 34 bps
during the year ended December 31, 2024, compared to 20 bps during 2023, primarily due to an increase in net charge-offs on commercial
and industrial loans of $87 million.
The ratio of consumer loan net charge-offs as a percent of average portfolio consumer loans increased to 64 bps during the year ended
December 31, 2024, compared to 52 bps during 2023, primarily due to increases in net charge-offs on solar energy installation loans and
indirect secured consumer loans of $30 million and $18 million, respectively.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
88 Fifth Third Bancorp
TABLE 51: Summary of Credit Loss Experience
For the years ended December 31 ($ in millions)
2024
2023
2022
Losses charged-off:
Commercial and industrial loans
$
(264)
(168)
(121)
Commercial mortgage loans
(1)
(1)
—
Commercial construction loans
—
(1)
(3)
Commercial leases
(2)
—
(7)
Residential mortgage loans
(2)
(4)
(3)
Home equity
(6)
(8)
(9)
Indirect secured consumer loans
(139)
(110)
(68)
Credit card
(87)
(82)
(68)
Solar energy installation loans
(63)
(27)
(2)
Other consumer loans(a)
(122)
(121)
(81)
Total losses charged-off
$
(686)
(522)
(362)
Recoveries of losses previously charged-off:
Commercial and industrial loans
$
22
13
25
Commercial mortgage loans
1
3
1
Commercial construction loans
—
—
1
Commercial leases
—
1
3
Residential mortgage loans
4
4
5
Home equity
7
7
11
Indirect secured consumer loans
49
38
32
Credit card
19
18
16
Solar energy installation loans
7
1
1
Other consumer loans(a)
45
49
40
Total recoveries of losses previously charged-off
$
154
134
135
Net losses charged-off:
Commercial and industrial loans
$
(242)
(155)
(96)
Commercial mortgage loans
—
2
1
Commercial construction loans
—
(1)
(2)
Commercial leases
(2)
1
(4)
Residential mortgage loans
2
—
2
Home equity
1
(1)
2
Indirect secured consumer loans
(90)
(72)
(36)
Credit card
(68)
(64)
(52)
Solar energy installation loans
(56)
(26)
(1)
Other consumer loans
(77)
(72)
(41)
Total net losses charged-off
$
(532)
(388)
(227)
Net losses charged-off as a percent of average portfolio loans and leases:
Commercial and industrial loans
0.46 %
0.27
0.17
Commercial mortgage loans
—
(0.02)
(0.01)
Commercial construction loans
—
0.02
0.04
Commercial leases
0.07
(0.04)
0.13
Total commercial loans and leases
0.34 %
0.20
0.13
Residential mortgage loans
(0.01)
—
(0.01)
Home equity
(0.01)
0.03
(0.05)
Indirect secured consumer loans
0.57
0.45
0.21
Credit card
3.98
3.55
2.98
Solar energy installation loans
1.41
0.89
0.25
Other consumer loans
2.79
2.32
1.33
Total consumer loans
0.64 %
0.52
0.29
Total net losses charged-off as a percent of average portfolio loans and leases
0.45 %
0.32
0.19
(a)
For the years ended December 31, 2024, 2023 and 2022, the Bancorp recorded $28, $35 and $32, respectively, in both losses charged-off and recoveries of losses
previously charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit
enhancements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
89 Fifth Third Bancorp
Allowance for Credit Losses
The allowance for credit losses is comprised of the ALLL and the reserve for unfunded commitments. As described in Note 1 of the Notes to
Consolidated Financial Statements, the Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred
over the remaining contractual terms of the related loans and leases (as adjusted for prepayments). The Bancorp’s methodology for
determining the ALLL includes an estimate of expected credit losses on a collective basis for groups of loans and leases with similar risk
characteristics and specific allowances for loans and leases which are individually evaluated. For collectively evaluated loans and leases, the
Bancorp uses quantitative models to forecast expected credit losses based on the probability of a loan or lease defaulting, the expected
balance at the estimated date of default and the expected loss percentage given a default. The Bancorp’s expected credit loss models consider
historical credit loss experience, current market and economic conditions, and forecasted changes in market and economic conditions if such
forecasts are considered reasonable and supportable.
The Bancorp also considers qualitative factors in determining the ALLL in order to capture characteristics in the portfolio that impact
expected credit losses but are not fully captured within the Bancorp’s expected credit loss models. These may include adjustments for
changes in policies or procedures in underwriting, monitoring or collections, lending and risk management personnel and results of internal
audit and quality control reviews. These may also include adjustments, when deemed necessary, for specific idiosyncratic risks such as
geopolitical events, natural disasters and their effects on regional borrowers, changes in product structures or changes in economic conditions
that are not reflected in the quantitative credit loss models. Qualitative factor adjustments may also be used to address the impacts of
unforeseen events on key inputs and assumptions within the Bancorp’s expected credit loss models, such as the reasonable and supportable
forecast period, changes to historical loss information or changes to the reversion period or methodology. Given the diverse circumstances
that necessitate the consideration of qualitative factors, the specific factors which are determined to be relevant and their relative significance
to the ALLL vary from period to period.
In addition to the ALLL, the Bancorp maintains a reserve for unfunded commitments recorded in other liabilities in the Consolidated Balance
Sheets. The methodology used to determine the adequacy of this reserve is similar to the Bancorp’s methodology for determining the ALLL.
The provision for unfunded commitments is included in the provision for credit losses in the Consolidated Statements of Income.
For the commercial portfolio segment, the estimates for probability of default are primarily based on internal ratings assigned to each
commercial borrower on a 13-point scale and historical observations of how those ratings migrate to a default over time in the context of
macroeconomic conditions. For loans with available credit, the estimate of the expected balance at the time of default considers expected
utilization rates, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those
economic conditions. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those
characteristics to changes in macroeconomic conditions.
For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models
primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the
probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those
characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also especially impactful in
the expected credit loss models for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity)
and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected
balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on
macroeconomic conditions and the utilization history of similar borrowers under those economic conditions.
At both December 31, 2024 and 2023, the Bancorp used three forward-looking economic scenarios during the reasonable and supportable
forecast period in its expected credit loss models to address the inherent imprecision in macroeconomic forecasting. Each of the three
scenarios was developed by a third party that is subject to the Bancorp’s Third-Party Risk Management program including oversight by the
Bancorp’s independent model risk management group. The scenarios included a most likely outcome (Baseline) and two less probable
scenarios with one being more favorable than the Baseline and the other being less favorable. The more favorable alternative scenario
(Upside) depicted a stronger near-term growth outlook while the less favorable outlook (Downside) depicted a moderate recession.
The Baseline scenario was developed such that the expectation is that the economy will perform better than the projection 50% of the time
and worse than the projection 50% of the time. The Upside scenario was developed such that there is a 10% probability that the economy will
perform better than the projection and a 90% probability that it will perform worse. The Downside scenario was developed such that there is a
90% probability that the economy will perform better than the projection and a 10% probability that it will perform worse.
December 31, 2024 ACL
The ACL as of December 31, 2024 decreased $2 million from December 31, 2023, as the favorable impacts of improvements in the risk
profile of the loan and lease portfolio and changes in consumer loan portfolio mix were partially offset by the impacts of higher period-end
loan and lease balances and increases in specific reserves. As of December 31, 2024, the Bancorp’s macroeconomic scenarios included
estimates of the expected impacts of the changes in economic conditions caused by expected interest rate cuts and geopolitical risks. At
December 31, 2024, the Bancorp assigned an 80% probability weighting to the Baseline scenario and 10% to each of the Upside and
Downside scenarios.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
90 Fifth Third Bancorp
During the fourth quarter of 2024, economic growth remained resilient despite restrictive monetary policy. The FOMC continues to seek a
soft landing for the economy while balancing the risks of cutting rates too soon with the risks of maintaining a restrictive policy for too long.
Seeing positive momentum in inflation trending toward its long-term target of 2%, the FOMC cut the federal funds rate by 25 bps in both
November and December 2024.
The Baseline scenario used in the December 31, 2024 ACL assumed that the normalization of inflation rates will take longer than previously
expected when considering recent trends and additional inflationary pressures that may arise from changes in U.S. fiscal, tariff and
immigration policies. This scenario assumed a rise in inflation mid-2025, increasing to 2.7% by the end of 2026 and not approaching the 2%
target before early 2027. In response to fiscal tightening and high interest rates, this scenario also assumed that real GDP growth would be
below trend in the near term but that the unemployment rate will remain steady. The Baseline scenario assumed an average annual real GDP
growth rate of 2.2% for 2025, followed by 1.6% in 2026 and 1.8% in 2027. The Baseline scenario also assumed an average unemployment
rate of 4.1% for 2025, 2026 and 2027. While the Treasury rate environment is relatively stable with the 10-year yield remaining in a range
between 4.24% and 4.33%, credit spreads are projected to expand from 1.5% at the start of the scenario to a peak of 2.60% in early 2027.
Lastly, the Baseline scenario assumed additional cuts to the target federal funds rate beyond 2024, with an average federal funds rate of 4.1%
in 2025 that decreases to an average of 3.4% and 3.0% in 2026 and 2027, respectively.
The Upside scenario assumed that, on an average annual basis, the change in real GDP is 3.2% in 2025, 2.4% in 2026 and 2.0% in 2027. The
Upside scenario also assumed an average unemployment rate of 3.3% in both 2025 and 2026 and 3.5% in 2027. 10-year Treasury yields are
fairly stable reaching a peak of 4.43% at the end of 2025, while credit spreads are consistent with the baseline scenario peaking at 2.57% in
2027. In the Upside scenario, the forecast for federal funds rate cuts was generally consistent with the Baseline scenario.
The Downside scenario included significant worsening of economic conditions, causing the U.S. economy to fall into a recession in the first
quarter of 2025. The Downside scenario assumed that real GDP declines from the fourth quarter of 2024 through the third quarter of 2025,
with a cumulative decline of 2.6%, modestly recovering to an average annualized GDP growth rate of 0.4% for the full year of 2026 and
2.7% for the full year of 2027. The Downside scenario assumed an average unemployment rate of 7.3% in 2025, increasing to an average of
8.0% in 2026 and decreasing to an average of 6.6% in 2027. The 10-year treasury yield increases to 4.51% in mid-2025, then drops to 3.07%
by the end of the third quarter of 2025. Credit spreads also expand in this scenario reaching a peak of 3.89% in the third quarter of 2025. In
the Downside scenario, the forecast for the federal funds rate included steeper rate cuts than the Baseline scenario, with average target rates of
4.1% in 2025, followed by 1.7% and 1.1% in 2026 and 2027, respectively.
The Bancorp’s qualitative adjustments resulted in a net increase to the ACL as of December 31, 2024, primarily driven by a qualitative
increase in the ACL for the commercial portfolio segment. These qualitative adjustments primarily reflect the Bancorp’s expectations that
additional credit losses may be present in its portfolio loans and leases beyond what is predictable through the use of quantitative models. The
qualitative increase for the commercial portfolio segment was primarily driven by additional allowances for certain nonowner-occupied
commercial loans secured by real estate, particularly loans secured by office buildings, based on current challenges in the commercial real
estate market that are not fully reflected in the Bancorp’s quantitative models. These challenges include, but are not limited to, an imbalance
between supply and demand in the market for commercial real estate properties and pressures on borrowers and property valuations resulting
from elevated interest rates. Specific to office properties, the Bancorp has also observed industry data indicating that the office sector of the
commercial real estate market continues to lag behind others in terms of property values, driven in part by lessened demand as a result of the
increased prevalence of remote work across many professions since the onset of the COVID-19 pandemic.
The Bancorp’s quantitative credit loss models are sensitive to changes in economic forecast assumptions over the reasonable and supportable
forecast period. Applying a 100% probability weighting to the Downside scenario rather than using the probability-weighted three scenario
approach would result in an increase in the quantitative ACL of approximately $2.1 billion. This sensitivity calculation only reflects the
impact of changing the probability weighting of the scenarios in the quantitative credit loss models and excludes any additional
considerations associated with the qualitative component of the ACL that might be warranted if probability weights were adjusted.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
91 Fifth Third Bancorp
The following table provides a rollforward of the Bancorp’s ACL:
TABLE 52: Changes in Allowance for Credit Losses
For the years ended December 31 ($ in millions)
2024
2023
2022
ALLL:
Balance, beginning of period
$
2,322
2,194
1,892
Losses charged-off(a)
(686)
(522)
(362)
Recoveries of losses previously charged-off(a)
154
134
135
Provision for loan and lease losses
562
565
529
Impact of adoption of ASU 2022-02
—
(49)
—
Balance, end of period
$
2,352
2,322
2,194
Reserve for unfunded commitments:
Balance, beginning of period
$
166
216
182
(Benefit from) provision for the reserve for unfunded commitments
(32)
(50)
34
Balance, end of period
$
134
166
216
(a)
For the years ended December 31, 2024, 2023 and 2022, the Bancorp recorded $28, $35 and $32, respectively, in both losses charged-off and recoveries of losses
previously charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit
enhancements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
92 Fifth Third Bancorp
The following table provides an attribution of the Bancorp’s ALLL to portfolio loans and leases:
TABLE 53: Attribution of Allowance for Loan and Lease Losses to Portfolio Loans and Leases
As of December 31 ($ in millions)
2024
2023
Attributed ALLL:
Commercial and industrial loans
$
728
767
Commercial mortgage loans
351
284
Commercial construction loans
59
66
Commercial leases
16
13
Residential mortgage loans
146
145
Home equity
106
102
Indirect secured consumer loans
311
271
Credit card
165
227
Solar energy installation loans
351
292
Other consumer loans
119
155
Total ALLL
$
2,352
2,322
Portfolio loans and leases:
Commercial and industrial loans
$
52,271
53,270
Commercial mortgage loans
12,246
11,276
Commercial construction loans
5,588
5,621
Commercial leases
3,188
2,579
Residential mortgage loans(a)
17,543
17,026
Home equity
4,188
3,916
Indirect secured consumer loans
16,313
14,965
Credit card
1,734
1,865
Solar energy installation loans
4,202
3,728
Other consumer loans
2,518
2,988
Total portfolio loans and leases
$ 119,791
117,234
Attributed ALLL as a percent of respective portfolio loans and leases:
Commercial and industrial loans
1.39 %
1.44
Commercial mortgage loans
2.87
2.52
Commercial construction loans
1.06
1.17
Commercial leases
0.50
0.50
Residential mortgage loans
0.83
0.85
Home equity
2.53
2.60
Indirect secured consumer loans
1.91
1.81
Credit card
9.52
12.17
Solar energy installation loans
8.35
7.83
Other consumer loans
4.73
5.19
Total ALLL as a percent of portfolio loans and leases
1.96 %
1.98
Total ACL as a percent of portfolio loans and leases
2.08
2.12
(a)
Includes $108 and $116 of residential mortgage loans measured at fair value at December 31, 2024 and 2023, respectively.
The Bancorp’s ALLL may vary significantly from period to period based on changes in economic conditions, economic forecasts and the
composition and credit quality of the Bancorp’s loan and lease portfolio. For additional information on the Bancorp’s methodology for
measuring the ACL, refer to Note 1 of the Notes to Consolidated Financial Statements.
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
93 Fifth Third Bancorp
INTEREST RATE AND PRICE RISK MANAGEMENT
Interest rate risk is the risk to earnings or capital arising from movement of interest rates. This risk primarily impacts the Bancorp’s income
categories through changes in interest income on earning assets and the cost of interest-bearing liabilities, and through fee items that are
related to interest-sensitive activities such as mortgage origination and servicing income and through earnings credits earned on commercial
deposits that offset commercial deposit fees. Price risk is the risk to earnings or capital arising from changes in the value of financial
instruments and portfolios due to movements in interest rates, volatilities, foreign exchange rates, equity prices and commodity prices.
Management considers interest rate risk a prominent market risk in terms of its potential impact on earnings. Interest rate risk may occur for
any one or more of the following reasons:
•
Assets and liabilities mature or reprice at different times;
•
Short-term and long-term market interest rates change by different amounts; or
•
The expected maturities of various assets or liabilities shorten or lengthen as interest rates change.
In addition to the direct impact of interest rate changes on NII and interest-sensitive fees, interest rates can impact earnings through their
effect on loan and deposit demand, credit losses, mortgage origination volumes, the value of servicing rights and other sources of the
Bancorp’s earnings. Changes in interest rates and other market factors can impact earnings through changes in the value of portfolios, if not
appropriately hedged. Stability of the Bancorp’s net income is largely dependent upon the effective management of interest rate risk and to a
lesser extent price risk.
Management continually reviews the Bancorp’s on- and off-balance sheet composition, earnings flows, and hedging strategies and models
interest rate risk and price risk exposures, and possible actions to manage these risks, given numerous possible future interest rate and market
factor scenarios. A series of key risk indicators and early warning indicators are employed to ensure that risks are managed within the
Bancorp’s risk tolerance for interest rate risk and price risk.
The Commercial Banking and Wealth and Asset Management lines of business manage price risk for capital markets sales and trading
activities related to their respective businesses. The Consumer and Small Business Banking line of business manages price risk for the
origination and sale of conforming residential mortgage loans to government agencies and government-sponsored enterprises. The Bancorp’s
Treasury department manages interest rate risk and price risk for all other activities. Independent oversight is provided by ERM and Board-
approved key risk indicators are used to ensure risks are managed within the Bancorp’s risk tolerance.
The Bancorp’s Market Risk Management Committee, which includes senior management representatives and reports to the Corporate Credit
Committee (accountable to the ERMC), provides oversight and monitors price risk for the capital markets sales and trading activities. The
Bancorp’s ALCO, which includes senior management representatives and is accountable to the ERMC, provides oversight and monitors
interest rate and price risks, including those for Mortgage and Treasury activities.
Net Interest Income Sensitivity
The Bancorp employs a variety of measurement techniques to identify and manage its interest rate risk, including the use of an NII simulation
model to analyze the sensitivity of NII to changes in interest rates. The model is based on contractual and estimated cash flows and repricing
characteristics for all of the Bancorp’s assets, liabilities and off-balance sheet exposures and incorporates market-based assumptions
regarding the effect of changing interest rates on the prepayment rates of certain assets and attrition rates of certain liabilities. The model also
includes senior management’s projections of the future volume and pricing of each of the product lines offered by the Bancorp as well as
other pertinent assumptions. The NII simulation model does not represent a forecast of the Bancorp’s net interest income but is a tool utilized
to assess the risk of the impact of changing market interest rates across a range of market interest rate environments. As a result, actual results
will differ from simulated results for multiple reasons, which may include actual balance sheet composition differences, timing, magnitude
and frequency of interest rate changes, deviations from projected customer behavioral assumptions as well as from changes in market
conditions and management strategies.
As of December 31, 2024, the Bancorp’s interest rate risk exposure is governed by a risk framework that utilizes the change in NII over 12-
month and 24-month horizons under parallel and non-parallel increases and decreases in interest rates. Risk appetite thresholds are utilized
for scenarios assuming a 200 bps increase and a 200 bps decrease in interest rates over 12-month and 24-month horizons. The Bancorp
routinely analyzes various potential and extreme scenarios, including parallel ramps and shocks as well as steepening and other non-parallel
shifts in rates, to assess where risks to net interest income persist or develop as changes in the balance sheet and market rates evolve, and
employs key risk indicators and early warning indicators to monitor and manage exposures under these types of scenarios. Additionally, the
Bancorp routinely evaluates its exposures to changes in the basis between interest rates.
In order to recognize the risk of noninterest-bearing demand deposit balance migration or attrition in a rising interest rate environment, the
Bancorp’s NII sensitivity modeling assumes additional attrition of approximately $470 million of demand deposit balances over a period of
24 months for each 100 bps increase in short-term market interest rates. Similarly, the Bancorp’s NII sensitivity modeling incorporates
approximately $470 million of incremental growth in noninterest-bearing deposit balances over 24 months for each 100 bps decrease in short-
term market interest rates. The incremental balance attrition and growth are modeled to flow into and out of funding products that reprice in
conjunction with short-term market rate changes.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
94 Fifth Third Bancorp
Another important deposit modeling assumption is the amount by which interest-bearing deposit rates will increase or decrease when market
interest rates increase or decrease. This deposit repricing sensitivity is known as the beta, and it represents the expected amount by which the
Bancorp’s interest-bearing deposit rates will change for a given change in short-term market rates. The Bancorp utilizes dynamic deposit beta
models to adjust assumed repricing sensitivity depending on market rate levels. The dynamic beta models were developed utilizing the
Bancorp’s performance during prior interest rate cycles. Since the beginning of the recent tightening cycle in early 2022 and through
December 31, 2024, the Bancorp’s actual cumulative interest-bearing deposit beta was approximately 55%-60%. Using the dynamic beta
models, the Bancorp’s NII sensitivity modeling assumes weighted-average rising-rate interest-bearing deposit betas at the end of the ramped
parallel scenarios of approximately 75%-80% for both a 100 bps and 200 bps increase in rates. In the event of continued rate cuts, this
approach assumes a weighted-average falling-rate interest-bearing deposit beta at the end of the ramped parallel scenarios of approximately
65%-70% for both a 100 bps and 200 bps decrease in rates. In falling rate scenarios, deposit rate floors are utilized to ensure modeled deposit
rates will not become negative. NII simulation modeling assumes no lag between the timing of changes in market rates and the timing of
deposit repricing despite such timing lags having occurred in prior rate cycles. Future actual performance will be dependent on market
conditions, the level of competition for deposits and the magnitude of continued interest rate increases. The Bancorp provides sensitivity
analysis in Tables 55 and 56 for key assumptions related to its deposit modeling, including beta and demand deposit balance performance.
The Bancorp continually evaluates the sensitivity of its interest rate risk measures to these important deposit modeling assumptions. The
Bancorp also regularly monitors the sensitivity of other important modeling assumptions, such as loan and security prepayments and early
withdrawals on fixed-rate customer liabilities.
The following table shows the Bancorp’s estimated NII sensitivity profile and policy limits as of December 31:
TABLE 54: Estimated NII Sensitivity Profile and Policy Limits
2024
2023
% Change in NII
(FTE)
Policy Limit
% Change in NII
(FTE)
Policy Limit
Change in Interest Rates (bps)
12
Months
13-24
Months
12
Months
13-24
Months
12
Months
13-24
Months
12
Months
13-24
Months
+200 Ramp over 12 months
(3.57)
%
(4.00)
(6.00)
(7.00)
(2.55)
%
(4.89)
(5.00)
(6.00)
+100 Ramp over 12 months
(1.75)
(1.84)
N/A
N/A
(1.26)
(2.30)
N/A
N/A
-100 Ramp over 12 months
0.94
0.24
N/A
N/A
0.28
0.32
N/A
N/A
-200 Ramp over 12 months
1.57
(0.27)
(6.00)
(7.00)
0.17
(0.19)
(5.00)
(6.00)
Table 54 presents the change in estimated net interest income for 12 month and 13-24 month horizons for alternative interest rate scenarios
relative to the net interest income projection for a static rate scenario for those same time horizons. As previously mentioned, these numbers
do not represent a forecast, but are instead risk measures that are monitored to evaluate the consolidated interest rate risk position of the
Bancorp. At December 31, 2024, the Bancorp’s NII sensitivity in the rising-rate scenarios is negative in years one and two as interest expense
is expected to increase more than interest income due to deposit repricing and balance migration estimates given the high interest rate
environment. The Bancorp’s NII simulation projects an increase in NII in years one and two under the parallel 100 bps ramp decrease in
interest rates and in year one in the 200 bps ramp decrease in interest rates, driven by an expectation that deposits would reprice faster than
earning assets. However, in year two, some deposits have reached their floors but assets continue to reprice to lower rates, generating less
NII. The changes in the estimated NII sensitivity profile compared to December 31, 2023 were primarily attributable to increases in fixed-rate
loans and interest-bearing core deposits combined with reduced wholesale funding.
Tables 55 and 56 provide the sensitivity of the Bancorp’s estimated NII profile at December 31, 2024 to changes to certain deposit balance
and deposit repricing sensitivity (beta) assumptions.
The following table includes the Bancorp’s estimated NII sensitivity profile with an immediate $1 billion decrease and an immediate $1
billion increase in demand deposit balances as of December 31, 2024:
TABLE 55: Estimated NII Sensitivity Profile at December 31, 2024 with a $1 Billion Change in Demand Deposit Assumption
% Change in NII (FTE)
Immediate $1 Billion Balance
Decrease
Immediate $1 Billion Balance
Increase
Change in Interest Rates (bps)
12
Months
13-24
Months
12
Months
13-24
Months
+200 Ramp over 12 months
(4.46) %
(4.97)
(2.68)
(3.03)
+100 Ramp over 12 months
(2.56)
(2.66)
(0.95)
(1.02)
-100 Ramp over 12 months
0.32
(0.27)
1.57
0.75
-200 Ramp over 12 months
1.03
(0.63)
2.11
0.10
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
95 Fifth Third Bancorp
The following table includes the Bancorp’s estimated NII sensitivity profile with a 10% increase and a 10% decrease to the corresponding
deposit beta assumptions as of December 31, 2024:
TABLE 56: Estimated NII Sensitivity Profile at December 31, 2024 with Deposit Beta Assumptions Changes
% Change in NII (FTE)
Betas 10% Higher(a)
Betas 10% Lower(a)
Change in Interest Rates (bps)
12
Months
13-24
Months
12
Months
13-24
Months
+200 Ramp over 12 months
(5.17) %
(6.95)
(2.06)
(1.37)
+100 Ramp over 12 months
(2.55)
(3.30)
(1.00)
(0.54)
-100 Ramp over 12 months
1.67
1.52
0.26
(0.90)
-200 Ramp over 12 months
2.98
2.07
0.23
(2.31)
(a)
Applies a +/- 10% multiple on assumed betas.
Economic Value of Equity Sensitivity
The Bancorp also uses EVE as a measurement tool to govern and manage its interest rate risk exposure. The exposure is governed by a risk
framework that uses risk appetite thresholds for scenarios assuming an instantaneous 200 bps increase and a 200 bps decrease in interest
rates. The Bancorp routinely analyzes exposures to other interest rate scenarios and employs key risk indicators to monitor and manage
exposures. Whereas the NII sensitivity analysis highlights the impact on forecasted NII on an FTE basis (non-GAAP) over one- and two-year
time horizons, EVE is a point-in-time analysis of the economic sensitivity of current balance sheet and off-balance sheet positions that
incorporates all cash flows over their estimated remaining lives. The EVE of the balance sheet is defined as the discounted present value of
all asset and net derivative cash flows less the discounted value of all liability cash flows. Due to this longer horizon, the sensitivity of EVE to
changes in the level of interest rates is a measure of longer-term interest rate risk. EVE values only the current balance sheet and does not
incorporate any assumptions related to continued production or renewal activities used in the NII sensitivity analysis. As with the NII
simulation model, assumptions about the timing and variability of existing balance sheet cash flows are critical in the EVE analysis.
Particularly important are assumptions driving loan and security prepayments and the expected balance attrition and pricing of indeterminate-
lived deposits.
The following table shows the Bancorp’s estimated EVE sensitivity profile as of December 31:
TABLE 57: Estimated EVE Sensitivity Profile
2024
2023
Change in Interest Rates (bps)
% Change in
EVE
Policy Limit
% Change in
EVE
Policy Limit
+200 Shock
(6.57) %
(12.00)
(3.68)
(12.00)
+100 Shock
(3.04)
N/A
(1.49)
N/A
-100 Shock
1.79
N/A
0.65
N/A
-200 Shock
2.48
(12.00)
(1.67)
(12.00)
The EVE sensitivity is negative in both a +200 bps and +100 bps rising-rate scenario and positive in both a -200 bps and -100 bps falling-rate
scenario at December 31, 2024. The changes in the estimated EVE sensitivity profile from December 31, 2023 were primarily related to
changes in forward interest rate expectations, mix-shift of deposit composition into higher beta products, an increase in fixed-rate loans and
reduced wholesale funding, which was partially offset by shortening of the investment portfolio duration.
While an instantaneous shift in spot interest rates is used in this analysis to provide an estimate of exposure, the Bancorp believes that a
gradual shift in interest rates would have a more modest impact. Since EVE measures the discounted present value of cash flows over the
estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter
time horizon (e.g., the current fiscal year). Further, EVE does not account for factors such as future balance sheet growth, changes in product
mix, changes in yield curve relationships and changing product spreads that could mitigate or exacerbate the impact of changes in interest
rates. The NII simulations and EVE analyses do not necessarily include certain actions that management may undertake to manage risk in
response to actual changes in interest rates.
The Bancorp regularly evaluates its exposures to a static balance sheet forecast, basis risks relative to the Prime Rate and various SOFR
terms, yield curve twist risks and embedded options risks. In addition, the impacts on NII on an FTE basis and EVE of extreme changes in
interest rates are modeled, wherein the Bancorp employs the use of yield curve shocks and environment-specific scenarios.
Use of Derivatives to Manage Interest Rate Risk
An integral component of the Bancorp’s interest rate risk management strategy is its use of derivative instruments to minimize significant
fluctuations in earnings caused by changes in market interest rates. Examples of derivative instruments that the Bancorp may use as part of its
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
96 Fifth Third Bancorp
interest rate risk management strategy include interest rate swaps, interest rate floors, interest rate caps, forward contracts, forward starting
interest rate swaps, options, swaptions and TBA securities.
Tables 58 and 59 show all swap and floor positions that are utilized for purposes of managing the Bancorp’s exposures to the variability of
interest rates. These positions are used to convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e.,
notional amounts) to another interest rate index, to hedge the exposure to changes in fair value of a recognized asset attributable to changes in
the benchmark interest rate or to hedge forecasted transactions for the variability in cash flows attributable to the contractually specified
interest rate. The volume, maturity and mix of portfolio swaps change frequently as the Bancorp adjusts its broader interest rate risk
management objectives and the balance sheet positions to be hedged. For further information, refer to Note 14 of the Notes to Consolidated
Financial Statements.
The following tables present additional information about the interest rate swaps and floors used in Fifth Third’s asset and liability
management activities:
TABLE 58: Summary of Qualifying Hedging Instruments
Weighted-Average
As of December 31, 2024 ($ in millions)
Notional
Amount
Fair Value
Remaining
(years)
Fixed Rate
Index
Interest rate swaps related to C&I loans – cash flow – receive-fixed
$
11,000
(2)
5.7
3.05 %
SOFR
Interest rate swaps related to C&I loans – cash flow – receive-fixed –
forward starting(a)
1,000
1
7.0
3.20
SOFR
Interest rate swaps related to commercial mortgage and commercial
construction loans – cash flow – receive-fixed – forward starting(a)
4,000
3
7.1
3.50
SOFR
Interest rate swaps related to long-term debt – fair value – receive-
fixed
4,955
(11)
4.7
5.04
SOFR
Total interest rate swaps
$
20,955
(9)
(a)
Forward starting swaps will become effective in January and February 2025.
TABLE 59: Summary of Qualifying Hedging Instruments
As of December 31, 2023 ($ in millions)
Notional
Amount
Fair Value
Remaining
(years)
Fixed Rate
Index
Interest rate swaps related to C&I loans – cash flow – receive-fixed
$
8,000
(9)
4.4
3.02 %
SOFR
Interest rate swaps related to C&I loans – cash flow – receive-fixed –
forward starting(a)
6,000
5
7.8
3.11
SOFR
Interest rate swaps related to commercial mortgage and commercial
construction loans – cash flow – receive-fixed – forward starting(a)
4,000
—
8.1
3.50
SOFR
Interest rate swaps related to long-term debt – fair value – receive-
fixed
5,955
(32)
4.9
5.18
SOFR
Total interest rate swaps
$
23,955
(36)
Interest rate floors related to C&I loans – cash flow – receive-fixed
$
3,000
1
1.0
2.25
SOFR
(a)
Forward starting swaps will become effective on various dates between June 2024 and February 2025.
Additionally, as part of its overall risk management strategy relative to its residential mortgage banking activities, the Bancorp enters into
forward contracts accounted for as free-standing derivatives to economically hedge IRLCs that are also considered free-standing derivatives.
The Bancorp economically hedges its exposure to residential mortgage loans held for sale through the use of forward contracts and mortgage
options as well. Refer to the Residential Mortgage Servicing Rights and Price Risk section for the discussion of the use of derivatives to
economically hedge this exposure.
The Bancorp also enters into derivative contracts with major financial institutions to economically hedge market risks assumed in interest rate
derivative contracts with commercial customers. Generally, these contracts have similar terms in order to protect the Bancorp from market
volatility. Credit risk arises from the possible inability of the counterparties to meet the terms of their contracts, which the Bancorp minimizes
through collateral arrangements, approvals, limits and monitoring procedures. The Bancorp has risk limits and internal controls in place to
help ensure excessive risk is not being taken in providing this service to customers. These controls include an independent determination of
interest rate volatility and potential future exposure on these contracts and counterparty credit approvals performed by independent risk
management. For further information, including the notional amount and fair values of these derivatives, refer to Note 14 of the Notes to
Consolidated Financial Statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
97 Fifth Third Bancorp
Portfolio Loans and Leases and Interest Rate Risk
Although the Bancorp’s portfolio loans and leases contain both fixed and floating/adjustable-rate products, the rates of interest earned by the
Bancorp on the outstanding balances are generally established for a period of time. The interest rate sensitivity of loans and leases is directly
related to the length of time the rate earned is established.
The following table summarizes the carrying value of the Bancorp’s portfolio loans and leases, excluding interest receivable, disaggregated
by scheduled principal repayment, as of December 31, 2024:
TABLE 60: Cash Flows from Portfolio Loans and Leases
($ in millions)
Due in 1 year
or less
Due after 1 year
through 5 years
Due after 5 years
through 15 years
Due after 15
years
Total
Commercial and industrial loans
$
11,581
38,582
2,088
20
52,271
Commercial mortgage loans
3,763
7,147
1,232
104
12,246
Commercial construction loans
2,188
3,219
174
7
5,588
Commercial leases
763
2,090
254
81
3,188
Total commercial loans and leases
18,295
51,038
3,748
212
73,293
Residential mortgage loans
936
2,914
6,479
7,214
17,543
Home equity
279
577
379
2,953
4,188
Indirect secured consumer loans
3,312
9,638
2,900
463
16,313
Credit card
1,734
—
—
—
1,734
Solar energy installation loans
194
550
1,756
1,702
4,202
Other consumer loans
1,026
887
556
49
2,518
Total consumer loans
7,481
14,566
12,070
12,381
46,498
Total portfolio loans and leases
$
25,776
65,604
15,818
12,593
119,791
The following table displays a summary of cash flows, excluding interest receivable, occurring after one year for both fixed and floating/
adjustable-rate loans and leases as of December 31, 2024:
TABLE 61: Cash Flows from Portfolio Loans and Leases Occurring After One Year
Interest Rate
($ in millions)
Fixed
Floating or Adjustable
Commercial and industrial loans
$
4,338
36,352
Commercial mortgage loans
1,956
6,527
Commercial construction loans
123
3,277
Commercial leases
2,425
—
Total commercial loans and leases
8,842
46,156
Residential mortgage loans
12,410
4,197
Home equity
354
3,555
Indirect secured consumer loans
12,994
7
Solar energy installation loans
4,008
—
Other consumer loans
1,252
240
Total consumer loans
31,018
7,999
Total portfolio loans and leases
$
39,860
54,155
Residential Mortgage Servicing Rights and Price Risk
The fair value of the residential MSR portfolio was $1.7 billion at both December 31, 2024 and 2023. The value of servicing rights can
fluctuate sharply depending on changes in interest rates and other factors. Generally, as interest rates decline and loans are prepaid to take
advantage of refinancing, the total value of existing servicing rights declines because no further servicing fees are collected on repaid loans.
For further information on the significant drivers and components of the valuation adjustments on MSRs, refer to the Noninterest Income
subsection of the Statements of Income Analysis section of MD&A. The Bancorp maintains a non-qualifying hedging strategy relative to its
mortgage banking activity in order to manage a portion of the risk associated with changes in the value of its MSR portfolio as a result of
changing interest rates. The Bancorp may adjust its hedging strategy to reflect its assessment of the composition of its MSR portfolio, the cost
of hedging and the anticipated effectiveness of the hedges given the economic environment. Refer to Note 13 of the Notes to Condensed
Consolidated Financial Statements for more information on servicing rights and the instruments used to hedge price risk on MSRs.
Foreign Currency Risk
The Bancorp may enter into foreign exchange derivative contracts to economically hedge certain foreign denominated loans. The derivatives
are classified as free-standing instruments with the revaluation gain or loss being recorded in other noninterest income in the Consolidated
Statements of Income. The balance of the Bancorp’s foreign denominated loans at December 31, 2024 and 2023 was $861 million and $1.0
billion, respectively. The Bancorp also enters into foreign exchange contracts for the benefit of commercial customers to hedge their exposure
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
98 Fifth Third Bancorp
to foreign currency fluctuations. Similar to the hedging of price risk from interest rate derivative contracts entered into with commercial
customers, the Bancorp also enters into foreign exchange contracts with major financial institutions to economically hedge a substantial
portion of the exposure from client driven foreign exchange activity. The Bancorp has risk limits and internal controls in place to help ensure
excessive risk is not being taken in providing this service to customers. These controls include an independent determination of currency
volatility and potential future exposure on these contracts, counterparty credit approvals and country limits performed by independent risk
management.
Commodity Risk
The Bancorp also enters into commodity contracts for the benefit of commercial customers to hedge their exposure to commodity price
fluctuations. Similar to the hedging of foreign exchange and price risk from interest rate derivative contracts, the Bancorp also enters into
commodity contracts with major financial institutions to economically hedge a substantial portion of the exposure from client driven
commodity activity. The Bancorp may also offset this risk with exchange-traded commodity contracts. The Bancorp has risk limits and
internal controls in place to help ensure excessive risk is not taken in providing this service to customers. These controls include an
independent determination of commodity volatility and potential future exposure on these contracts and counterparty credit approvals
performed by independent risk management.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
99 Fifth Third Bancorp
LIQUIDITY RISK MANAGEMENT
The goal of liquidity management is to provide adequate funds to meet changes in loan and lease demand, unexpected levels of deposit
withdrawals and other contractual obligations. Mitigating liquidity risk is accomplished by maintaining liquid assets in the form of cash and
investment securities, maintaining sufficient unused borrowing capacity in the debt markets and delivering consistent growth in core deposits.
A summary of certain obligations and commitments to make future payments under contracts is included in Note 18 of the Notes to
Consolidated Financial Statements.
The Bancorp’s Treasury department manages funding and liquidity based on point-in-time metrics as well as forward-looking projections,
which incorporate different sources and uses of funds under base and stress scenarios. Liquidity risk is monitored and managed by the
Treasury department with independent oversight provided by ERM, and a series of Policy Limits and Key Risk Indicators are established to
ensure risks are managed within the Bancorp’s risk tolerance. The Bancorp maintains a contingency funding plan that provides for liquidity
stress testing, which assesses the liquidity needs under varying market conditions, time horizons, asset growth rates and other events. The
contingency plan provides for ongoing monitoring of unused borrowing capacity and available sources of contingent liquidity to prepare for
unexpected liquidity needs and to cover unanticipated events that could affect liquidity. The contingency plan also outlines the Bancorp’s
response to various levels of liquidity stress and actions that should be taken during various scenarios.
Liquidity risk is monitored and managed for both Fifth Third Bancorp and its subsidiaries. The Bancorp (parent company) receives
substantially all of its liquidity from dividends from its subsidiaries, primarily Fifth Third Bank, National Association. Subsidiary dividends
are supplemented with term debt to enable the Bancorp to maintain sufficient liquidity to meet its cash obligations, including debt service and
scheduled maturities, common and preferred dividends, unfunded commitments to subsidiaries and other planned capital actions in the form
of share repurchases. Liquidity resources are more limited at the Bancorp, making its liquidity position more susceptible to market
disruptions. Bancorp liquidity is assessed using a cash coverage horizon, ensuring the entity maintains sufficient liquidity to withstand a
period of sustained market disruption while meeting its anticipated obligations over an extended stressed horizon.
The Bancorp’s ALCO, which includes senior management representatives and is accountable to the ERMC, monitors and manages liquidity
and funding risk within Board-approved policy limits. In addition to the risk management activities of ALCO, the Bancorp has a liquidity risk
management function as part of ERM that provides independent oversight of liquidity risk management.
Sources of Funds
The Bancorp’s primary sources of funds include revenue from noninterest income as well as cash flows from loan and lease repayments,
payments from securities related to sales and maturities, the sale or securitization of loans and leases and funds generated by core deposits, in
addition to the use of borrowings.
Table 60 of the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A presents information about
the timing of cash flows from loan and lease repayments. The Bancorp’s available-for-sale debt and other securities and held-to-maturity
securities portfolios had a fair value of $50.5 billion at December 31, 2024. From these portfolios, $8.2 billion in principal and interest
payments are expected to be received in the next 12 months and an additional $8.6 billion is expected to be received in the next 13 to 24
months. For further information on the Bancorp’s securities portfolio, refer to the Investment Securities subsection of the Balance Sheet
Analysis section of MD&A.
Asset-driven liquidity is provided by the Bancorp’s ability to monetize loans, leases and investment securities through a variety of channels,
including repurchase agreements, outright sales, securitizations or pledging to secured borrowing sources. In order to reduce the exposure to
interest rate fluctuations and to manage liquidity, the Bancorp has developed securitization and sale procedures for several types of interest-
sensitive assets. A majority of the long-term, fixed-rate single-family residential mortgage loans underwritten according to FHLMC or
FNMA guidelines are sold for cash upon origination. Additional assets such as certain other residential mortgage loans, certain commercial
loans and leases, home equity loans, automobile loans, solar energy installation loans and other consumer loans are also capable of being
securitized or sold. The Bancorp sold or securitized loans and leases totaling $4.4 billion during the year ended December 31, 2024 compared
to $7.1 billion during the year ended December 31, 2023. For further information, refer to Note 13 of the Notes to Consolidated Financial
Statements.
Core deposits have historically provided the Bancorp with a sizeable source of relatively stable and low-cost funds. The Bancorp’s average
core deposits and average shareholders’ equity funded 86% and 85% of its average total assets for the years ended December 31, 2024 and
2023, respectively. In addition to core deposit funding, the Bancorp also accesses a variety of other short-term and long-term funding sources,
which include the use of the FHLB system. Management does not rely on any one source of liquidity and manages availability in response to
changing balance sheet needs.
In June of 2023, the Board of Directors authorized $10.0 billion of debt or other securities for issuance, of which $7.0 billion of debt or other
securities were available for issuance as of December 31, 2024. The Bancorp is authorized to file any necessary registration statements with
the SEC to permit ready access to the public securities markets; however, access to these markets may depend on market conditions. The
Bancorp issued and sold fixed-rate/floating-rate senior notes of $1.0 billion in January 2024 and $750 million in September 2024, as further
discussed in Note 17 of the Notes to Consolidated Financial Statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
100 Fifth Third Bancorp
As of December 31, 2024, the Bank’s global bank note program had a borrowing capacity of $25.0 billion, of which $20.4 billion was
available for issuance. Additionally, at December 31, 2024, the Bank had approximately $67.6 billion of borrowing capacity available
through secured borrowing sources, including the FRB and the FHLB. For further information on a subsequent event related to long-term
debt, refer to Note 32.
Current Liquidity Position
The Bancorp maintains a strong liquidity profile driven by strong core deposit funding and over $100 billion in current available liquidity.
Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A for more information regarding the Bancorp’s deposit
portfolio characteristics. The Bancorp maintains a liquidity profile focused on core deposit and stable long-term funding sources, while
supplementing with a variety of secured and unsecured wholesale funding sources across the maturity spectrum, which allows for the
effective management of concentration and rollover risk. The Bancorp’s investment portfolio remains highly concentrated in liquid and
readily marketable instruments and is a significant source of secured borrowing capacity via several monetization channels. As part of its
liquidity management activities, the Bancorp maintains collateral at its secured funding providers to ensure immediate availability of funding.
Additionally, the Bancorp executes periodic test trades to assess the operational processes and market depth associated with its secured
funding sources.
As of December 31, 2024, the Bancorp (parent company) had sufficient liquidity to meet contractual obligations and all preferred and
common dividends without accessing the capital markets or receiving upstream dividends from the Bank subsidiary for 33 months.
The Bancorp and its subsidiaries, on a consolidated basis, have certain obligations and commitments to make future payments under various
types of contracts. In addition to commitments to extend credit and letters of credit (which are further discussed in Note 18 of the Notes to
Consolidated Financial Statements), these include deposits, lease obligations, partnership investment commitments, derivative contracts,
borrowings, and pension benefit payments. Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A and Notes 9,
12, 14, 16, 17 and 22 of the Notes to Consolidated Financial Statements for additional information on these contractual obligations.
Credit Ratings
The cost and availability of financing to the Bancorp and Bank are impacted by its credit ratings. A downgrade to the Bancorp’s or Bank’s
credit ratings could affect its ability to access the credit markets and increase its borrowing costs, thereby adversely impacting the Bancorp’s
or Bank’s financial condition and liquidity. Key factors in maintaining high credit ratings include a stable and diverse earnings stream, strong
credit quality, strong capital ratios and diverse funding sources, in addition to disciplined liquidity monitoring procedures.
The Bancorp’s and Bank’s credit ratings are summarized in Table 62. The ratings reflect the ratings agency’s view on the Bancorp’s and
Bank’s capacity to meet financial commitments.*
*As an investor, you should be aware that a security rating is not a recommendation to buy, sell or hold securities, that it may be subject to
revision or withdrawal at any time by the assigning rating organization and that each rating should be evaluated independently of any other
rating. Additional information on the credit rating ranking within the overall classification system is located on the website of each credit
rating agency.
TABLE 62: Agency Ratings
As of February 24, 2025
Moody’s
Standard and
Poor’s
Fitch
DBRS
Morningstar
Fifth Third Bancorp:
Short-term borrowings
No rating
A-2
F1
R-1L
Senior debt
Baa1
BBB+
A-
A
Subordinated debt
Baa1
BBB
BBB+
AL
Fifth Third Bank, National Association:
Short-term borrowings
P-2
A-2
F1
R-1M
Short-term deposit
P-1
No rating
F1
No rating
Long-term deposit
A1
No rating
A
AH
Senior debt
A3
A-
A-
AH
Subordinated debt
A3
BBB+
BBB+
A
Rating Agency Outlook for Fifth Third Bancorp and Fifth
Third Bank, National Association:
Stable
Stable
Stable
Stable
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
101 Fifth Third Bancorp
OPERATIONAL RISK MANAGEMENT
Operational risk is the risk to current or projected financial condition and resilience arising from inadequate or failed internal processes or
systems, human errors or misconduct or adverse external events that are neither market- nor credit-related. Operational risk is inherent in the
Bancorp’s activities and can manifest itself in various ways, including fraudulent acts, business interruptions, inappropriate behavior of
employees, unintentional failure to comply with applicable laws and regulations, poor design or delivery of products and services,
cybersecurity or physical security incidents and privacy breaches or failure of third parties to perform in accordance with their arrangements.
These events could result in financial losses, reputational damage, litigation and regulatory fines or other damage to the Bancorp. The
Bancorp’s risk management goal is to keep operational risk at appropriate levels consistent with the Bancorp’s risk appetite, financial
strength, the characteristics of its businesses, the markets in which it operates and the competitive and regulatory environment to which it is
subject.
To control, monitor and govern operational risk, the Bancorp maintains an overall Enterprise Risk Management Framework which comprises
governance oversight, risk assessment, capital measurement, monitoring and reporting as well as a formal three lines of defense approach.
ERM is responsible for prescribing the framework to the lines of business and corporate functions and providing independent oversight of its
implementation (second line of defense). Business Controls groups are in place in each of the lines of business to ensure consistent
implementation and execution of managing day-to-day operational risk (first line of defense).
The Bancorp’s Enterprise Risk Management Framework consists of five integrated components, including identifying, assessing, managing,
monitoring and independent governance reporting of risk. The corporate Operational Risk Management function within Enterprise Risk is
responsible for developing and overseeing the implementation of the Bancorp’s approach to managing operational risk. This includes
providing governance, awareness and training, tools, guidance and oversight to support implementation of key risk programs and systems as
they relate to operational risk management. These include programs, such as risk and control self-assessments, product delivery risk
assessments, scenario analysis, new product/initiative risk reviews, key risk indicators, Third-Party Risk Management, cybersecurity risk
management, review of operational losses and monitoring of significant organizational or process changes. The function is also responsible
for developing reports that support the proactive management of operational risk across the enterprise. The lines of business and corporate
functions are responsible for managing the operational risks associated with their areas in accordance with the Enterprise Risk Management
Framework. The framework is intended to enable the Bancorp to function with a sound and well-controlled operational environment. These
processes support the Bancorp’s goals to minimize future operational losses and strengthen the Bancorp’s performance by maintaining
sufficient capital to absorb operational losses that are incurred.
The Bancorp also maintains a robust information security program to support the management of cybersecurity risk within the organization
with a focus on prevention, detection and recovery processes. Refer to Part I, Item 1C of this report for more information, which is
incorporated herein by reference.
External threats remain elevated which may result in increased fraud and cybersecurity risks. The Bancorp’s strategic initiatives also have the
potential to increase operational risk as changes to process and technology are implemented. Other factors such as increased reliance on third
parties, reliance on data and increased use of cloud-based technologies as well as the use of emerging technologies such as generative models
and artificial intelligence may introduce additional operational risk considerations. These risks continue to be carefully managed and
monitored to ensure effective controls are in place, with appropriate oversight and governance by the second line of defense.
Fifth Third also focuses on the reporting and escalation of operational control issues to senior management and the Board of Directors. The
Operational Risk Committee is the key committee that oversees and supports Fifth Third in the management of operational risk across the
enterprise. The Information Security Governance Committee and Model Risk Committee report to the Operational Risk Committee and are
responsible for governance of information security and model risks. The Operational Risk Committee reports to the ERMC, which reports to
the RCC of the Board of Directors of Fifth Third Bancorp and Fifth Third Bank, National Association.
The Bancorp is aware of and actively monitoring climate-related risks. Climate-related risks could impact the Bancorp in the form of physical
risks due to acute or chronic weather-related events that could disrupt the operations of the Bancorp or could impair the ability of clients to
meet financial obligations. The Bancorp also faces transition risk resulting from economic transition towards a lower-carbon future which
may negatively impact some clients or present credit, strategic or reputational risks to the Bancorp.
Climate risk is a priority for management and accordingly the Board oversees both the RCC and the Nominating and Corporate Governance
Committee. The RCC is responsible for overseeing the development and implementation of Fifth Third’s Enterprise Risk Management
Framework including climate risks. In the course of business, the Bancorp’s Environmental Risk Group works with partners to manage or
mitigate environmental risks including climate-related risks. As part of its larger environmental, social and governance responsibilities the
Nominating and Corporate Governance Committee is responsible for overseeing climate strategy and climate-related issues in the context of
stakeholder concerns.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
102 Fifth Third Bancorp
LEGAL AND REGULATORY COMPLIANCE RISK MANAGEMENT
Legal and regulatory compliance risk is the risk of legal or regulatory sanctions, financial loss or damage to reputation as a result of
noncompliance with (i) applicable laws, regulations, rules and other regulatory requirements (including but not limited to the risk of
consumers experiencing economic loss or other legal harm as a result of noncompliance with consumer protection laws, regulations and
requirements); (ii) internal policies and procedures, standards of best practice or codes of conduct; and (iii) principles of integrity and fair
dealing applicable to Fifth Third’s activities and functions. Legal risks include the risk of actions against the institution that result in
unenforceable contracts, lawsuits, legal sanctions, or adverse judgments, which disrupt or otherwise negatively affect the operations or
condition of the institution. Failure to effectively manage such risks can elevate the risk level or manifest itself as other types of key risks,
including reputational or operational risk. Fifth Third focuses on managing legal and regulatory compliance risk in accordance with the
Bancorp’s integrated Enterprise Risk Management Framework, which ensures consistent processes for identifying, assessing, managing,
monitoring and reporting risks. The Bancorp’s risk management goal is to keep compliance risk at appropriate levels, consistent with the
Bancorp’s risk appetite.
To mitigate such risks, Compliance Risk Management provides independent oversight to foster consistency and sufficiency in the execution
of the program and ensures that lines of business and support functions are adequately identifying, assessing and monitoring legal and
regulatory compliance risks and adopting proper mitigation strategies. Moreover, such strategies are modified from time to time to respond to
new or emerging risks in the environment. Compliance Risk Management and the Legal Division provide guidance to the lines of business
and enterprise functions, which are ultimately responsible for managing such risks associated with their areas. The Chief Compliance Officer
is responsible for formulating and directing the strategy, development, implementation, communication and maintenance of the Compliance
Risk Management program, which implements key compliance processes, including but not limited to, executive- and board-level governance
and reporting routines, compliance-related policies, risk assessments, key risk indicators, issues tracking, regulatory change management and
regulatory compliance testing and monitoring. In partnership with Compliance Risk Management, the Financial Crimes Division conducts
and oversees anti-money laundering and economic sanctions processes. Compliance Risk Management also partners with the Corporate
Responsibility Office to oversee the Bancorp’s compliance with the Community Reinvestment Act.
Fifth Third also reports and escalates legal and regulatory compliance risks to senior management and the Board of Directors. The
Management Compliance Committee, which is chaired by the Chief Compliance Officer, is the key committee that oversees and supports
Fifth Third in the management of compliance risk across the enterprise. The Management Compliance Committee oversees Bancorp-wide
compliance issues, industry best practices, legislative developments, regulatory concerns and other leading indicators of legal and regulatory
compliance risk. The Management Compliance Committee reports to the ERMC, which reports to the RCC of the Board of Directors of Fifth
Third Bancorp and Fifth Third Bank, National Association.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
103 Fifth Third Bancorp
CAPITAL MANAGEMENT
Management regularly reviews the Bancorp’s capital levels to help ensure it is appropriately positioned under various operating
environments. The Bancorp has established a Capital Committee which is responsible for making capital plan recommendations to
management. These recommendations are reviewed by the ERMC and the annual capital plan is approved by the Board of Directors. The
Capital Committee is responsible for execution and oversight of the capital actions of the capital plan.
Regulatory Capital Ratios
The Basel III Final Rule sets minimum regulatory capital ratios as well as defines the measure of “well-capitalized” for insured depository
institutions. For additional information regarding the prescribed capital ratios, refer to Note 29 of the Notes to Consolidated Financial
Statements.
The Bancorp is subject to the stress capital buffer requirement and must maintain capital ratios above its buffered minimum (regulatory
minimum plus stress capital buffer) in order to avoid certain limitations on capital distributions and discretionary bonuses to executive
officers. The FRB uses the supervisory stress test to determine the Bancorp’s stress capital buffer, subject to a floor of 2.5%. At
December 31, 2024 and 2023, the Bancorp’s stress capital buffer requirement was 3.2% and 2.5%, respectively. The Bancorp’s capital ratios
have exceeded the stress capital buffer requirement for all periods presented.
The Bancorp adopted ASU 2016-13 on January 1, 2020 and elected the five-year transition phase-in option for the impact of CECL on
regulatory capital with its regulatory filings as of March 31, 2020. The Bancorp’s modified CECL transition amount began phasing out on
January 1, 2022, and will be fully phased-out by January 1, 2025. The impact of the modified CECL transition amount on the Bancorp’s
regulatory capital at December 31, 2024 was an increase in capital of approximately $124 million. On a fully phased-in basis, the Bancorp’s
CET1 capital ratio would be reduced by 7 bps as of December 31, 2024.
The following table summarizes the Bancorp’s capital ratios as of December 31:
TABLE 63: Capital Ratios
($ in millions)
2024
2023
2022
Average total Bancorp shareholders’ equity as a percent of average assets
9.12 %
8.49
9.22
Tangible equity as a percent of tangible assets(a)(b)
9.02
8.65
8.31
Tangible common equity as a percent of tangible assets(a)(b)
8.03
7.67
7.30
Regulatory capital:(c)
CET1 capital
$
17,339
16,800
15,670
Tier 1 capital
19,455
18,916
17,786
Total regulatory capital
22,746
22,400
21,606
Risk-weighted assets
164,102
163,223
168,909
Regulatory capital ratios:(c)
CET1 capital
10.57 %
10.29
9.28
Tier 1 risk-based capital
11.86
11.59
10.53
Total risk-based capital
13.86
13.72
12.79
Leverage
9.22
8.73
8.56
(a)
These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
(b)
Excludes AOCI.
(c)
Regulatory capital ratios as of December 31, 2024, 2023 and 2022 are calculated pursuant to the five-year transition provision option to phase in the effects of
CECL on regulatory capital.
Capital Planning
The Bancorp maintains a comprehensive process for managing capital that considers the current and forward-looking macroeconomic and
regulatory environments and makes capital distributions that are consistent with FRB requirements and the Bancorp’s stress capital buffer
requirement. Under the Enhanced Prudential Standards tailoring rules, the Bancorp is subject to Category IV standards, under which the
Bancorp is required to develop and maintain a capital plan approved by the Board of Directors on an annual basis. The Bancorp is also
subject to the FRB’s supervisory stress tests every two years. The Bancorp was subject to the 2024 supervisory stress test conducted by the
FRB and submitted its Board-approved capital plan and information contained in Schedule C - Regulatory Capital Instruments, as required,
by the April 5, 2024 deadline.
Dividend Policy and Stock Repurchase Program
The Bancorp’s Capital Management and Dividend Policy reflects its earnings outlook, desired payout ratios, the need to maintain adequate
capital levels, the ability of its subsidiaries to pay dividends and the need to comply with safe and sound banking practices as well as meet
regulatory requirements and expectations. The Bancorp declared dividends per common share of $1.44, $1.36 and $1.26 during the years
ended December 31, 2024, 2023 and 2022, respectively.
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
104 Fifth Third Bancorp
In June of 2019, the Board of Directors authorized the Bancorp to repurchase up to 100 million common shares in the open market or in
privately negotiated transactions and to utilize any derivative or similar instrument to effect share repurchase transactions. Under this
authorization, the Bancorp entered into and settled a number of accelerated share repurchase transactions during the years ended
December 31, 2024 and 2023. Refer to Note 24 and Note 32 of the Notes to Consolidated Financial Statements for additional information on
the accelerated share repurchase activity.
The following table summarizes shares authorized for repurchase as part of publicly announced plans or programs:
TABLE 64: Share Repurchases
For the years ended December 31
2024
2023
Shares authorized for repurchase at January 1
32,115,811
37,705,807
Additional authorizations
—
—
Share repurchases(a)
(15,043,170)
(5,589,996)
Shares authorized for repurchase at December 31
17,072,641
32,115,811
Average price paid per share(a)
$
41.87
35.78
(a)
Excludes 1,866,182 and 1,649,542 shares repurchased during the years ended December 31, 2024 and 2023, respectively, in connection with various employee
compensation plans. These purchases are not included in the calculation for average price paid per share and do not count against the maximum number of
shares that may yet be repurchased under the Board of Directors’ authorization.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is set forth in the Interest Rate and Price Risk Management section of Item 7 (Management’s Discussion and Analysis of
Financial Condition and Results of Operations) of this Report and is incorporated herein by reference. This information contains certain
statements that we believe are forward-looking statements. Refer to page 15 for cautionary information regarding forward-looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
105 Fifth Third Bancorp
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Fifth Third Bancorp:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Fifth Third Bancorp and subsidiaries (the “Bancorp”) as of December 31,
2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three
years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Bancorp as of December 31, 2024 and 2023, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting
principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Bancorp’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24,
2025 expressed an unqualified opinion on the Bancorp’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Bancorp’s management. Our responsibility is to express an opinion on the Bancorp’s
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Bancorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Loan and Lease Losses (“ALLL”) — Qualitative Factors — Commercial Loans—Refer to Note 1 and Note 6 of the
Notes to Consolidated Financial Statements
Critical Audit Matter Description
The Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred over the remaining contractual terms
of the related loans and leases. The Bancorp’s methodology for determining the ALLL includes an estimate of expected credit losses on a
collective basis for groups of loans and leases with similar risk characteristics and specific allowances for loans and leases which are
individually evaluated.
For collectively evaluated loans and leases, the Bancorp uses models to forecast expected credit losses based on the probability of a loan or
lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. The Bancorp also
considers qualitative factors in determining the ALLL. These considerations inherently require significant management judgment to
determine the appropriate factors to be considered and the extent of their impact on the ALLL estimate. Qualitative factors are used to capture
characteristics in the portfolio that impact expected credit losses but that are not fully captured within the Bancorp’s expected credit loss
models. When evaluating the adequacy of allowances, consideration is given to the effect that changing economic conditions may have on
the Bancorp’s customers.
Table of Contents
106 Fifth Third Bancorp
Overall, the collective evaluation process requires significant management judgment when determining the estimation methodology and
inputs into the models, as well as in evaluating the reasonableness of the modeled results and the appropriateness of qualitative adjustments.
At December 31, 2024, the key qualitative factors included adjustments to the expected credit losses on the commercial loan portfolio
associated with the current economic environment.
The ALLL for the commercial portfolio segment was $1.2 billion at December 31, 2024, which includes adjustments for the qualitative
factors noted above.
Considering the estimation and judgment in determining adjustments for such qualitative factors, our audit of the ALLL and the related
disclosures involved subjective judgment about the qualitative adjustments to the commercial portfolio segment ALLL.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the qualitative adjustments for the commercial portfolio segment ALLL included the following, among others:
•
We tested the effectiveness of the Bancorp’s controls over the qualitative adjustments to the ALLL.
•
We assessed the reasonableness of, and evaluated support for, key qualitative adjustments based on market conditions, external
market data and commercial portfolio performance metrics.
•
We tested the completeness and accuracy and evaluated the relevance of the key data used as inputs to the qualitative adjustment
estimation process, including:
◦
Portfolio segment loan balances and other borrower-specific data
◦
Relevant macroeconomic indicators and data
•
With the assistance of our credit specialists, we tested the mathematical accuracy of the underlying support used as a basis for the
qualitative adjustments.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
February 24, 2025
We have served as the Company’s auditor since 1970.
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107 Fifth Third Bancorp
As of December 31 ($ in millions, except share data)
2024
2023
Assets
Cash and due from banks
$
3,014
3,142
Other short-term investments(a)
17,120
22,082
Available-for-sale debt and other securities (amortized cost of $43,878 and $55,789)
39,547
50,419
Held-to-maturity securities (fair value of $10,965 and $2)
11,278
2
Trading debt securities
1,185
899
Equity securities
341
613
Loans and leases held for sale (includes $574 and $334 of residential mortgage loans measured at fair value)
640
378
Portfolio loans and leases(a) (includes $108 and $116 of residential mortgage loans measured at fair value)
119,791
117,234
Allowance for loan and lease losses(a)
(2,352)
(2,322)
Portfolio loans and leases, net
117,439
114,912
Bank premises and equipment (includes $14 and $19 held for sale)
2,475
2,349
Operating lease equipment
319
459
Goodwill
4,918
4,919
Intangible assets
90
125
Servicing rights
1,704
1,737
Other assets(a)
12,857
12,538
Total Assets
$
212,927
214,574
Liabilities
Deposits:
Noninterest-bearing deposits
$
41,038
43,146
Interest-bearing deposits
126,214
125,766
Total deposits
167,252
168,912
Federal funds purchased
204
193
Other short-term borrowings
4,450
2,861
Accrued taxes, interest and expenses
2,137
2,195
Other liabilities(a)
4,902
4,861
Long-term debt(a)
14,337
16,380
Total Liabilities
$
193,282
195,402
Equity
Common stock(b)
$
2,051
2,051
Preferred stock(c)
2,116
2,116
Capital surplus
3,804
3,757
Retained earnings
24,150
22,997
Accumulated other comprehensive loss
(4,636)
(4,487)
Treasury stock(b)
(7,840)
(7,262)
Total Equity
$
19,645
19,172
Total Liabilities and Equity
$
212,927
214,574
(a)
Includes $51 and $55 of other short-term investments, $1,000 and $1,573 of portfolio loans and leases, $(19) and $(28) of ALLL, $5 and $10 of other assets, $12
and $14 of other liabilities and $889 and $1,409 of long-term debt from consolidated VIEs that are included in their respective captions above at December 31,
2024 and 2023, respectively. For further information, refer to Note 12.
(b)
Common shares: Stated value $2.22 per share; authorized 2,000,000,000; outstanding at December 31, 2024 – 669,853,830 (excludes 254,038,751 treasury
shares), 2023 – 681,124,810 (excludes 242,767,771 treasury shares).
(c)
500,000 shares of no par value preferred stock were authorized at both December 31, 2024 and 2023. There were 422,000 unissued shares of undesignated no
par value preferred stock at both December 31, 2024 and 2023. Each issued share of no par value preferred stock has a liquidation preference of $25,000.
500,000 shares of no par value Class B preferred stock were authorized at both December 31, 2024 and 2023. There were 300,000 unissued shares of
undesignated no par value Class B preferred stock at both December 31, 2024 and 2023. Each issued share of no par value Class B preferred stock has a
liquidation preference of $1,000.
Refer to the Notes to Consolidated Financial Statements.
Table of Contents
CONSOLIDATED BALANCE SHEETS
108 Fifth Third Bancorp
For the years ended December 31 ($ in millions, except share data)
2024
2023
2022
Interest Income
Interest and fees on loans and leases
$
7,477
7,334
4,954
Interest on securities
1,839
1,770
1,517
Interest on other short-term investments
1,110
656
116
Total interest income
10,426
9,760
6,587
Interest Expense
Interest on deposits
3,736
2,929
447
Interest on federal funds purchased
11
15
6
Interest on other short-term borrowings
157
247
108
Interest on long-term debt
892
742
417
Total interest expense
4,796
3,933
978
Net Interest Income
5,630
5,827
5,609
Provision for credit losses
530
515
563
Net Interest Income After Provision for Credit Losses
5,100
5,312
5,046
Noninterest Income(a)
Wealth and asset management revenue
647
581
570
Commercial payments revenue
608
564
568
Consumer banking revenue
555
546
542
Capital markets fees
424
422
387
Commercial banking revenue
377
409
419
Mortgage banking net revenue
211
250
215
Other noninterest income
12
91
149
Securities gains (losses), net
15
18
(84)
Total noninterest income
2,849
2,881
2,766
Noninterest Expense(a)
Compensation and benefits
2,763
2,694
2,554
Technology and communications
474
464
416
Net occupancy expense
339
331
307
Equipment expense
153
148
145
Loan and lease expense
132
133
167
Marketing expense
115
126
118
Card and processing expense
84
84
80
Other noninterest expense
973
1,225
932
Total noninterest expense
5,033
5,205
4,719
Income Before Income Taxes
2,916
2,988
3,093
Applicable income tax expense
602
639
647
Net Income
2,314
2,349
2,446
Dividends on preferred stock
159
137
116
Net Income Available to Common Shareholders
$
2,155
2,212
2,330
Earnings per share - basic
$
3.16
3.23
3.38
Earnings per share - diluted
$
3.14
3.22
3.35
Average common shares outstanding - basic
682,160,985
684,172,079
688,633,659
Average common shares outstanding - diluted
687,300,837
687,678,291
694,952,038
(a)
During the fourth quarter of 2024, certain noninterest income and noninterest expense line items were reclassified to better align disclosures to business
activities. These reclassifications were retrospectively applied to all prior periods presented. Total noninterest income and noninterest expense did not change as
a result of these reclassifications. Refer to Note 1 for additional information.
Refer to the Notes to Consolidated Financial Statements.
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME
109 Fifth Third Bancorp
For the years ended December 31 ($ in millions)
2024
2023
2022
Net Income
$
2,314
2,349
2,446
Other Comprehensive (Loss) Income, Net of Tax:
Net unrealized losses on available-for-sale debt securities:
Unrealized holding gains (losses) arising during the year
15
494
(5,478)
Unrealized losses on available-for-sale debt securities transferred to held-to-maturity
securities
785
—
—
Reclassification adjustment for net losses (gains) included in net income
14
1
(2)
Net unrealized losses on available-for-sale debt securities transferred to held-to-maturity
securities:
Unrealized losses on available-for-sale debt securities transferred to held-to-maturity
securities
(785)
—
—
Amortization of unrealized losses on available-for-sale debt securities transferred to
held-to-maturity securities
101
—
—
Net unrealized losses on cash flow hedge derivatives:
Unrealized holding losses arising during the year
(552)
(131)
(774)
Reclassification adjustment for net losses (gains) included in net income
270
257
(77)
Defined benefit pension plans, net:
Net actuarial (loss) gain arising during the year
(2)
(1)
9
Reclassification of amounts to net periodic benefit costs
3
3
5
Other
2
—
—
Other comprehensive (loss) income, net of tax
(149)
623
(6,317)
Comprehensive Income (Loss)
$
2,165
2,972
(3,871)
Refer to the Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
110 Fifth Third Bancorp
($ in millions, except per share data)
Common
Stock
Preferred
Stock
Capital
Surplus
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Treasury
Stock
Total
Equity
Balance at December 31, 2021
$ 2,051
2,116 3,624 20,236
1,207 (7,024)
22,210
Net income
2,446
2,446
Other comprehensive loss, net of tax
(6,317)
(6,317)
Cash dividends declared:
Common stock ($1.26 per share)
(877)
(877)
Preferred stock:(a)
Series H ($1,275.00 per share)
(31)
(31)
Series I ($1,656.24 per share)
(30)
(30)
Series J ($1,249.19 per share)
(15)
(15)
Series K ($1,237.50 per share)
(12)
(12)
Series L ($1,125.00 per share)
(16)
(16)
Class B, Series A ($60.00 per share)
(12)
(12)
Shares acquired for treasury
(100)
(100)
Impact of stock transactions under stock compensation plans, net
60
21
81
Balance at December 31, 2022
$ 2,051
2,116 3,684 21,689
(5,110) (7,103)
17,327
Impact of cumulative effect of change in accounting principle
37
37
Balance at January 1, 2023
2,051
2,116 3,684 21,726
(5,110) (7,103)
17,364
Net income
2,349
2,349
Other comprehensive income, net of tax
623
623
Cash dividends declared:
Common stock ($1.36 per share)
(941)
(941)
Preferred stock:(a)
Series H ($1,740.35 per share)
(42)
(42)
Series I ($1,656.24 per share)
(30)
(30)
Series J ($2,131.27 per share)
(25)
(25)
Series K ($1,237.50 per share)
(12)
(12)
Series L ($1,125.00 per share)
(16)
(16)
Class B, Series A ($60.00 per share)
(12)
(12)
Shares acquired for treasury
(201)
(201)
Impact of stock transactions under stock compensation plans, net
73
42
115
Balance at December 31, 2023
$ 2,051
2,116 3,757 22,997
(4,487) (7,262)
19,172
Impact of cumulative effect of change in accounting principle(b)
(10)
(10)
Balance at January 1, 2024
2,051
2,116 3,757 22,987
(4,487) (7,262)
19,162
Net income
2,314
2,314
Other comprehensive loss, net of tax
(149)
(149)
Cash dividends declared:
Common stock ($1.44 per share)
(992)
(992)
Preferred stock:(a)
Series H ($2,144.06 per share)
(51)
(51)
Series I ($2,316.08 per share)
(42)
(42)
Series J ($2,168.54 per share)
(26)
(26)
Series K ($1,237.50 per share)
(12)
(12)
Series L ($1,125.00 per share)
(16)
(16)
Class B, Series A ($60.00 per share)
(12)
(12)
Shares acquired for treasury
(630)
(630)
Impact of stock transactions under stock compensation plans, net
47
52
99
Balance at December 31, 2024
$ 2,051
2,116 3,804 24,150
(4,636) (7,840)
19,645
(a)
Refer to Note 24 for further information on dividends declared for preferred stock.
(b)
Related to the adoption of ASU 2023-02 as of January 1, 2024. Refer to Note 1 for additional information.
Refer to the Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
111 Fifth Third Bancorp
For the years ended December 31 ($ in millions)
2024
2023
2022
Operating Activities
Net income
$ 2,314
2,349
2,446
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses
530
515
563
Depreciation, amortization and accretion
495
462
436
Stock-based compensation expense
164
169
165
Provision for (benefit from) deferred income taxes
72
(106)
(60)
Securities (gains) losses, net
(20)
(31)
84
MSR fair value adjustment
77
105
(177)
Net gains on sales of loans and fair value adjustments on loans held for sale
(34)
(27)
(126)
Net gains on disposition and impairment of bank premises and equipment and operating lease equipment
(14)
(7)
(1)
Gain on the TRA associated with Worldpay, Inc.
(11)
(22)
(46)
Proceeds from sales of loans held for sale
4,066
4,938 13,123
Loans originated or purchased for sale, net of repayments
(4,301) (4,242) (10,239)
Dividends representing return on equity method investments
44
46
50
Net change in:
Equity and trading debt securities
(3)
(128)
70
Other assets
(625)
326
646
Accrued taxes, interest and expenses and other liabilities
70
162
(506)
Net Cash Provided by Operating Activities
2,824
4,509
6,428
Investing Activities
Proceeds from sales:
AFS securities and other investments
782
2,813
4,359
Loans and leases
419
444
155
Bank premises and equipment
24
7
2
MSRs
5
—
—
Proceeds from repayments / maturities of AFS and HTM securities and other investments
5,814
4,235
4,495
Purchases:
AFS securities, equity method investments and other investments
(7,129) (6,244) (29,714)
Bank premises and equipment
(414)
(491)
(348)
MSRs
—
(25)
(213)
Proceeds from settlement of BOLI
34
14
49
Proceeds from sales and dividends representing return of equity method investments
11
69
87
Net cash received for divestitures
6
—
66
Net cash paid on acquisitions
—
—
(917)
Net change in:
Other short-term investments
4,962 (13,731) 26,224
Portfolio loans and leases
(3,540)
3,358 (8,992)
Operating lease equipment
65
63
(124)
Net Cash Provided by (Used in) Investing Activities
1,039 (9,488) (4,871)
Financing Activities
Net change in deposits
(1,660)
5,222 (5,994)
Net change in federal funds purchased and other short-term borrowings
(32)
(81)
(543)
Proceeds from short-term FHLB advances
4,100
6,750
7,550
Repayment of short-term FHLB advances
(2,500) (8,550) (3,250)
Proceeds from long-term debt issuances/advances
3,249
4,286
4,026
Repayment of long-term debt
(5,282) (1,657) (1,762)
Dividends paid on common and preferred stock
(1,176) (1,060)
(927)
Repurchases of treasury stock and related forward contract
(625)
(200)
(100)
Other
(65)
(55)
(85)
Net Cash (Used in) Provided by Financing Activities
(3,991)
4,655 (1,085)
(Decrease) Increase in Cash and Due from Banks
(128)
(324)
472
Cash and Due from Banks at Beginning of Period
3,142
3,466
2,994
Cash and Due from Banks at End of Period
$ 3,014
3,142
3,466
Refer to the Notes to Consolidated Financial Statements. Note 2 contains cash payments related to interest and income taxes in addition to non-cash investing and
financing activities.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
112 Fifth Third Bancorp
1. Summary of Significant Accounting and Reporting Policies
Nature of Operations
Fifth Third Bancorp, an Ohio corporation, conducts its principal lending, deposit gathering, transaction processing and service advisory
activities through its banking and non-banking subsidiaries from banking centers located throughout the Midwestern and Southeastern
regions of the United States as well as through other offices, telephone sales, the internet and mobile applications.
Basis of Presentation
The Consolidated Financial Statements include the accounts of the Bancorp and its majority-owned subsidiaries and VIEs in which the
Bancorp has been determined to be the primary beneficiary. Other entities, including certain joint ventures in which the Bancorp has the
ability to exercise significant influence over operating and financial policies of the investee, but upon which the Bancorp does not possess
control, are accounted for by the equity method and not consolidated. The investments in those entities in which the Bancorp does not have
the ability to exercise significant influence are generally carried at fair value unless the investment does not have a readily determinable fair
value. The Bancorp accounts for equity investments without a readily determinable fair value using the measurement alternative to fair value,
representing the cost of the investment minus any impairment recorded and plus or minus changes resulting from observable price changes in
orderly transactions for an identical or a similar investment of the same issuer. Intercompany transactions and balances among consolidated
entities have been eliminated.
Certain prior period data has been reclassified to conform to current period presentation. Specifically, certain line items within noninterest
income and noninterest expense have been reclassified to better align disclosures to business activities. Within noninterest income, these
reclassifications resulted in three new financial statement line items, including commercial payments revenue, consumer banking revenue and
capital markets fees. Commercial banking revenue and other noninterest income were also affected by the reclassifications. Within
noninterest expense, these reclassifications resulted in the separate disclosure of loan and lease expense, which was previously a component
of other noninterest expense. These reclassifications did not impact total noninterest income or total noninterest expense and were applied
retrospectively to all prior periods presented.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Due from Banks
Cash and due from banks consist of currency and coin, cash items in the process of collection and due from banks. Currency and coin
includes both U.S. and foreign currency owned and held at Fifth Third offices and that is in-transit to the FRB. Cash items in the process of
collection include checks and drafts that are drawn on another depository institution or the FRB that are payable immediately upon
presentation in the U.S. Balances due from banks include noninterest-bearing balances that are funds on deposit at other depository
institutions or the FRB.
Investment Securities
Debt securities are classified as held-to-maturity, available-for-sale or trading on the date of purchase. Only those securities which
management has the intent and ability to hold to maturity are classified as held-to-maturity and reported at amortized cost. Debt securities are
classified as available-for-sale when, in management’s judgment, they may be sold in response to, or in anticipation of, changes in market
conditions. Debt securities are classified as trading typically when bought and held principally for the purpose of selling them in the near
term. Trading debt securities are reported at fair value with unrealized gains and losses included in noninterest income. Available-for-sale
debt securities are reported at fair value with unrealized gains and losses, net of related deferred income taxes, included in OCI. For available-
for-sale debt securities hedged in a fair value hedge, the amortized cost basis of the hedged items (excluding unrealized gains and losses)
includes the cumulative fair value hedging basis adjustments. Changes in the fair value of these securities which are attributable to changes in
the hedged risk are recognized in earnings instead of OCI. Accrued interest receivable on investment securities is presented in the
Consolidated Balance Sheets as a component of other assets.
Available-for-sale debt securities with unrealized losses are reviewed quarterly to determine if the decline in fair value is the result of a credit
loss or other factors. An allowance for credit losses is recorded against available-for-sale debt securities to reflect the amount of the
unrealized loss attributable to credit; however, this impairment is limited by the amount that the fair value is less than the amortized cost
basis. Any remaining unrealized loss is recognized through OCI. Changes in the allowance for credit losses are recognized in earnings.
The determination of whether or not a credit loss exists is based on consideration of the cash flows expected to be collected from the debt
security. The Bancorp develops these expectations after considering various factors such as agency ratings, the financial condition of the
issuer or underlying obligors, payment history, payment structure of the security, industry and market conditions, underlying collateral and
other factors which may be relevant based on the facts and circumstances pertaining to individual securities.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
113 Fifth Third Bancorp
If the Bancorp intends to sell the debt security or will more likely than not be required to sell the debt security before recovery of its
amortized cost basis, then the allowance for credit losses, if previously recorded, is written off and the security’s amortized cost is written
down to the security’s fair value at the reporting date, with any incremental impairment recorded as a charge to noninterest income.
Held-to-maturity debt securities are assessed periodically to determine if an allowance is necessary to absorb credit losses expected to occur
over the remaining contractual life of the securities. The carrying amount of held-to-maturity debt securities is presented net of the allowance
for credit losses when such an allowance is deemed necessary.
Debt securities classified as available-for-sale may be transferred to the held-to-maturity classification if the Bancorp determines that it has
the positive intent and ability to hold the securities until their maturity. Upon transfer to held-to-maturity, the transferred securities are
reported at amortized cost plus or minus the pre-tax amount of the remaining unrealized gains or losses reported in AOCI at the transfer date.
The resulting premium or discount is amortized into income over the remaining life of the securities as an adjustment to yield. Any unrealized
gains or losses that exist on the date of transfer continue to be reported as a component of AOCI and are amortized into income over the
remaining life of the securities as an adjustment to yield, offsetting the amortization of the premium or discount that was recognized at the
transfer date. Any allowance for credit losses that was previously recorded when the securities were classified as available-for-sale is reversed
into earnings on the date of transfer. After the transfer to held-to-maturity, the securities would be re-assessed for any necessary allowance for
credit losses, as previously discussed.
Equity securities with readily determinable fair values not accounted for under the equity method are reported at fair value with unrealized
gains and losses included in noninterest income in the Consolidated Statements of Income. Equity securities without readily determinable fair
values are measured at cost minus impairment, if any, plus or minus changes as a result of an observable price change for the identical or
similar investment of the same issuer. At each quarterly reporting period, the Bancorp performs a qualitative assessment to evaluate whether
impairment indicators are present. If qualitative indicators are identified, the investment is measured at fair value with the impairment loss
included in noninterest income in the Consolidated Statements of Income.
The fair value of a security is determined based on quoted market prices. If quoted market prices are not available, fair value is determined
based on quoted prices of similar instruments.
Premiums on purchased callable debt securities are amortized to the earliest call date if the call feature meets certain criteria. Otherwise,
premiums are amortized to maturity similar to discounts on callable debt securities.
Realized securities gains or losses are reported within noninterest income in the Consolidated Statements of Income. The cost of securities
sold is based on the specific identification method.
Portfolio Loans and Leases
Basis of accounting
Portfolio loans and leases are generally reported at the principal amount outstanding, net of unearned income, deferred direct loan origination
fees and costs and any direct principal charge-offs. Direct loan origination fees and costs are deferred and the net amount is amortized over
the contractual life or estimated life, if prepayments are estimated, of the related loans as a yield adjustment. Interest income is recognized
based on the principal balance outstanding, computed using the effective interest method.
Loans and leases acquired by the Bancorp through a purchase or a business combination are recorded at fair value as of the acquisition date.
Purchased loans and finance leases (including both sales-type leases and direct financing leases) are evaluated for evidence of credit
deterioration at acquisition and recorded at their initial fair value. For loans and finance leases acquired in a business combination that do not
exhibit evidence of more-than-insignificant credit deterioration since origination, the Bancorp does not carry over the acquired company’s
ALLL, but upon acquisition will record an ALLL and provision for credit losses reflective of credit losses expected to be incurred over the
remaining contractual life of the acquired loans. Premiums and discounts reflected in the initial fair value are amortized over the contractual
life of the loan as an adjustment to yield.
For loans and finance leases that exhibit evidence of more-than-insignificant credit quality deterioration since origination, the Bancorp’s
estimate of expected credit losses is added to the ALLL upon acquisition and to the initial purchase price of the loans and leases to determine
the initial amortized cost basis for the purchased financial assets with credit deterioration. Any resulting difference between the initial
amortized cost basis (as adjusted for expected credit losses) and the par value of the loans and leases at the acquisition date represents the
non-credit premium or discount, which is amortized over the contractual life of the loan or lease as an adjustment to yield. This method of
accounting for loans acquired with deteriorated credit quality does not apply to loans carried at fair value or loans held for sale.
The Bancorp’s lease portfolio consists of sales-type, direct financing and leveraged leases. Leases are classified as sales-type if the Bancorp
transfers control of the underlying asset to the lessee. The Bancorp classifies leases that do not meet any of the criteria for a sales-type lease
as a direct financing lease if the present value of the sum of the lease payments and any residual value guaranteed by the lessee and/or any
other third party equals or exceeds substantially all of the fair value of the underlying asset and the collection of the lease payments and
residual value guarantee is probable. Sales-type and direct financing leases are recorded at the aggregate of lease payments plus estimated
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
114 Fifth Third Bancorp
residual value of the leased property, less unearned income. Interest income on sales-type and direct financing leases is recognized over the
term of the lease to achieve a constant periodic rate of return on the outstanding investment.
Leveraged leases, entered into before January 1, 2019, are recorded at the aggregate of lease payments (less nonrecourse debt payments) plus
estimated residual value of the leased property, less unearned income. Interest income on leveraged leases is recognized over the term of the
lease to achieve a constant rate of return on the outstanding investment in the lease, net of the related deferred income tax liability, in the
years in which the net investment is positive. Leveraged lease accounting is no longer applied for leases entered into or modified after the
Bancorp’s adoption of ASU 2016-02, Leases, on January 1, 2019.
Nonaccrual loans and leases
The Bancorp places loans and leases on nonaccrual status when full repayment of principal and interest is not expected, unless the loan or
lease is well-secured and in the process of collection. When a loan is placed on nonaccrual status, the accrual of interest, amortization of loan
premium, accretion of loan discount and amortization/accretion of deferred net direct loan origination fees or costs are discontinued and all
previously accrued and unpaid interest is reversed against income. The Bancorp utilizes the following policies to determine when full
repayment of principal and interest on a loan or lease is not expected:
•
Commercial loans are placed on nonaccrual status when there is a clear indication that the borrower’s cash flows may not be
sufficient to meet payments as they become due. Commercial loans where the principal or interest has been in default for a period of
90 days or more are generally maintained on nonaccrual status unless the loan is fully or partially guaranteed by a government
agency or otherwise considered to be well secured and in the process of collection.
•
Residential mortgage loans are placed on nonaccrual status when principal and interest payments become past due 150 days or
more, unless repayment of the loan is fully or partially guaranteed by a government agency. Residential mortgage loans may stay on
nonaccrual status for an extended time as the foreclosure process typically lasts longer than 180 days. The Bancorp maintains a
reserve for the portion of accrued interest receivable that it estimates will be uncollectible, at the portfolio level, for residential
mortgage loans which are past due 90 days or more and on accrual status. This reserve is recorded as a component of other assets in
the Consolidated Balance Sheets, consistent with the classification of the related accrued interest receivable.
•
Home equity loans and lines of credit are placed on nonaccrual status if principal or interest becomes past due 90 days or more.
Home equity loans and lines of credit that become past due 60 days or more are also placed on nonaccrual status if the senior lien
has been past due 120 days or more.
•
Credit card loans that have been modified for a borrower experiencing financial difficulty are placed on nonaccrual status at the time
of the modification. Subsequent to the modification, accounts are placed on nonaccrual status when required payments become past
due 90 days or more in accordance with the modified terms.
•
Indirect secured consumer loans and other consumer loans are generally placed on nonaccrual status when principal or interest
becomes past due 90 days or more.
•
Loan balances remaining after charge-off on consumer loans subject to a bankruptcy proceeding are generally placed on nonaccrual
status within 60 days of verification of the bankruptcy unless the borrower demonstrates willingness to repay the loan through a
guaranteed repayment plan or reaffirmation of their obligation to the Bancorp. These loans are also placed on nonaccrual status
when principal or interest becomes past due 60 days or more.
•
Loans discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower are placed on nonaccrual status and considered
collateral-dependent loans at the time of discharge, regardless of the borrower’s payment history or capacity to repay in the future.
Well-secured loans are collateralized by perfected security interests in real and/or personal property for which the Bancorp estimates proceeds
from the sale would be sufficient to recover the outstanding principal and accrued interest balance of the loan and pay all costs to sell the
collateral. The Bancorp considers a loan in the process of collection if collection efforts or legal action is proceeding and the Bancorp expects
to collect funds sufficient to bring the loan current or recover the entire outstanding principal and accrued interest balance in the near future.
Nonaccrual loans and leases may be returned to accrual status when all delinquent principal and interest payments become current in
accordance with the loan agreement and the remaining principal and interest payments are reasonably assured of repayment in accordance
with the contractual terms of the loan agreement, or when the loan is both well-secured and in the process of collection. Nonaccrual loans that
have been modified for a borrower experiencing financial difficulty may not be returned to accrual status unless such loans have sustained
repayment performance of six months or more and are reasonably assured of repayment in accordance with the modified terms. Loans
discharged in a Chapter 7 bankruptcy may be returned to accrual status twelve months or more after discharge provided there is a sustained
payment history after bankruptcy and collectability is reasonably assured for all remaining contractual payments.
Except for loans discharged in a Chapter 7 bankruptcy that are not reaffirmed by the borrower, accruing residential mortgage loans, home
equity loans and lines of credit, indirect secured consumer loans and other consumer loans modified for borrowers experiencing financial
difficulty are maintained on accrual status, provided there is reasonable assurance of repayment and of performance according to the modified
terms based upon a current, well-documented credit evaluation. Accruing commercial loans modified for borrowers experiencing financial
difficulty are maintained on accrual status provided there is a sustained payment history of six months or more prior to the modification and
collectability is reasonably assured for all remaining contractual payments under the modified terms. Modifications of commercial loans and
credit card loans for borrowers experiencing financial difficulty that do not have a sustained payment history of six months or more in
accordance with their modified terms remain on nonaccrual status until a six-month payment history is sustained.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
115 Fifth Third Bancorp
Nonaccrual loans and leases are generally accounted for on the cost recovery method due to the existence of doubt as to the collectability of
the remaining amortized cost basis of nonaccrual assets. Under the cost recovery method, any payments received are applied to reduce
principal. Once the entire amortized cost basis is collected, additional payments received are treated as recoveries of amounts previously
charged-off until recovered in full, and any subsequent payments are treated as interest income. In certain circumstances when the remaining
amortized cost basis of a nonaccrual loan or lease is deemed to be fully collectible, the Bancorp may utilize the cash basis method to account
for interest payments received on a nonaccrual loan or lease. Under the cash basis method, interest income is recognized when cash is
received, to the extent such income would have been accrued on the loan’s remaining balance at the contractual rate.
The Bancorp records a charge-off to the ALLL when all or a portion of a loan or lease is deemed to be uncollectible, after considering the net
realizable value of any underlying collateral. Commercial loans and leases on nonaccrual status and criticized commercial loans with
aggregate borrower relationships exceeding $1 million are subject to an individual review to identify charge-offs. The Bancorp does not have
an established delinquency threshold for partially or fully charging off commercial loans and leases. The Bancorp records charge-offs on
consumer loans in accordance with applicable regulatory guidelines, which are primarily based on a loan’s delinquency status.
Loan modifications
In circumstances where an existing loan is modified (including a restructuring, refinancing, or other changes in terms which affect the loan’s
contractual cash flows), the Bancorp evaluates whether the modification results in a continuation of the existing loan or the origination of a
new loan. The Bancorp accounts for a modification as a new loan if the terms of the modified loan are at least as favorable to the Bancorp as
the terms for comparable loans to other borrowers with similar collection risks who are obtaining new loans, or if the modification of terms is
considered more than minor. If neither of these conditions are met, then the Bancorp will account for the loan as a continuation of the existing
loan. When a modification is accounted for as a new loan, any unamortized net deferred fees or costs from the original loan are recognized in
interest income when the new loan is originated. When a modification is accounted for as a continuation of the existing loan, the unamortized
net deferred fees or costs from the original loan and any additional incremental direct fees and costs are carried forward and deferred as part
of the amortized cost basis of the modified loan.
ALLL
The Bancorp disaggregates its portfolio loans and leases into portfolio segments for purposes of determining the ALLL. The Bancorp’s
portfolio segments include commercial, residential mortgage and consumer. The Bancorp further disaggregates its portfolio segments into
classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Classes within the commercial portfolio
segment are based on the purpose of the loan or lease and include commercial and industrial, commercial mortgage owner-occupied,
commercial mortgage nonowner-occupied, commercial construction and commercial leases. The residential mortgage portfolio segment is
also considered a class. Classes within the consumer portfolio segment are based on the loan product type and include home equity, indirect
secured consumer loans, credit card, solar energy installation loans and other consumer loans. For an analysis of the Bancorp’s ALLL by
portfolio segment and credit quality information by class, refer to Note 6.
The Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred over the remaining contractual terms
of the related loans and leases. Contractual terms are adjusted for expected prepayments but are not extended for expected extensions,
renewals or modifications except in circumstances where extension or renewal options are embedded in the original contract and not
unconditionally cancellable by the Bancorp.
Accrued interest receivable on loans is presented in the Consolidated Financial Statements as a component of other assets. When accrued
interest is deemed to be uncollectible (typically when a loan is placed on nonaccrual status), interest income is reversed. The Bancorp follows
established policies for placing loans on nonaccrual status, so uncollectible accrued interest receivable is reversed in a timely manner. As a
result, the Bancorp has elected not to measure a reserve for accrued interest receivable as part of its ALLL. However, the Bancorp does
record a reserve for the portion of accrued interest receivable that it expects to be uncollectible. Refer to the Portfolio Loans and Leases
section of this footnote for additional information.
Credit losses are charged and recoveries are credited to the ALLL. The ALLL is maintained at a level the Bancorp considers to be adequate
and is based on ongoing quarterly assessments and evaluations of the collectability of loans and leases, including historical credit loss
experience, current and forecasted market and economic conditions and consideration of various qualitative factors that, in management’s
judgment, deserve consideration in estimating expected credit losses. Provisions for credit losses are recorded for the amounts necessary to
adjust the ALLL to the Bancorp’s current estimate of expected credit losses on portfolio loans and leases.
The Bancorp’s methodology for determining the ALLL includes an estimate of expected credit losses on a collective basis for groups of loans
and leases with similar risk characteristics and specific allowances for loans and leases which are individually evaluated.
Larger commercial loans and leases included within aggregate borrower relationship balances exceeding $1 million on nonaccrual status are
individually evaluated for an ALLL. The Bancorp considers the current value of collateral, credit quality of any guarantees, the guarantor’s
liquidity and willingness to cooperate, the loan or lease structure (including modifications, if any) and other factors when determining the
amount of the ALLL. Other factors may include the borrower’s susceptibility to risks presented by the forecasted macroeconomic
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
116 Fifth Third Bancorp
environment, the industry and geographic region of the borrower, size and financial condition of the borrower, cash flow and leverage of the
borrower and the Bancorp’s evaluation of the borrower’s management. When loans and leases are individually evaluated, allowances are
determined based on management’s estimate of the borrower’s ability to repay the loan or lease given the availability of collateral and other
sources of cash flow, as well as an evaluation of legal options available to the Bancorp. Allowances for individually evaluated loans and
leases that are collateral-dependent are measured based on the fair value of the underlying collateral, less expected costs to sell where
applicable. Allowances for individually evaluated loans and leases that are not collateral-dependent are typically measured based on the
present value of expected cash flows of the loan or lease, discounted at its effective interest rate. Specific allowances on individually
evaluated commercial loans and leases are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral
conditions and actual collection and charge-off experience.
The Bancorp considers loans to be collateral-dependent when it becomes probable that repayment of the loan will be provided through the
sale or operation of the collateral instead of from payments made by the borrower. The expected credit losses for these loans are typically
estimated based on the fair value of the underlying collateral, less expected costs to sell where applicable. Specific allowances on individually
evaluated consumer and residential mortgage loans are reviewed quarterly and adjusted as necessary based on changing borrower and/or
collateral conditions and actual collection and charge-off experience.
Expected credit losses are estimated on a collective basis for loans and leases that are not individually evaluated. For collectively evaluated
loans and leases, the Bancorp uses models to forecast expected credit losses based on the probability of a loan or lease defaulting, the
expected balance at the estimated date of default and the expected loss percentage given a default. The estimate of the expected balance at the
time of default considers prepayments and, for loans with available credit, expected utilization rates. The Bancorp’s expected credit loss
models were developed based on historical credit loss experience and observations of migration patterns for various credit risk characteristics
(such as internal credit risk ratings, external credit ratings or scores, delinquency status, loan-to-value trends, etc.) over time, with those
observations evaluated in the context of concurrent macroeconomic conditions. The Bancorp developed its models from historical
observations capturing a full economic cycle when possible.
The Bancorp’s expected credit loss models consider historical credit loss experience, current market and economic conditions, and forecasted
changes in market and economic conditions if such forecasts are considered reasonable and supportable. Generally, the Bancorp considers its
forecasts to be reasonable and supportable for a period of up to three years from the estimation date. For periods beyond the reasonable and
supportable forecast period, expected credit losses are estimated by reverting to historical loss information without adjustment for changes in
economic conditions. This reversion is phased in over a two-year period. The Bancorp evaluates the length of its reasonable and supportable
forecast period, its reversion period and reversion methodology at least annually, or more often if warranted by economic conditions or other
circumstances.
The Bancorp also considers qualitative factors in determining the ALLL in order to capture characteristics in the portfolio that impact
expected credit losses but are not fully captured within the Bancorp’s expected credit loss models. These may include adjustments for
changes in policies or procedures in underwriting, monitoring or collections, lending and risk management personnel and results of internal
audit and quality control reviews. These may also include adjustments, when deemed necessary, for specific idiosyncratic risks such as
geopolitical events, natural disasters and their effects on regional borrowers, changes in product structures or changes in economic conditions
that are not reflected in the quantitative credit loss models. Qualitative factor adjustments may also be used to address the impacts of
unforeseen events on key inputs and assumptions within the Bancorp’s expected credit loss models, such as the reasonable and supportable
forecast period, changes to historical loss information or changes to the reversion period or methodology.
When evaluating the adequacy of allowances, consideration is also given to regional geographic concentrations and the closely associated
effect that changing economic conditions may have on the Bancorp’s customers.
Reserve for Unfunded Commitments
The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated expected credit
losses related to unfunded credit facilities and is included in other liabilities in the Consolidated Balance Sheets. The determination of the
adequacy of the reserve is based upon expected credit losses over the remaining contractual life of the commitments, taking into consideration
the current funded balance and estimated exposure over the reasonable and supportable forecast period. This process takes into consideration
the same risk elements that are analyzed in the determination of the adequacy of the Bancorp’s ALLL, as previously discussed. Net
adjustments to the reserve for unfunded commitments are included in the provision for credit losses in the Consolidated Statements of
Income.
Loans and Leases Held for Sale
Loans and leases held for sale primarily represent conforming fixed-rate residential mortgage loans originated or acquired with the intent to
sell in the secondary market and jumbo residential mortgage loans, commercial loans, other residential mortgage loans and other consumer
loans that management has the intent to sell. Loans and leases held for sale may be carried at the lower of cost or fair value, or carried at fair
value where the Bancorp has elected the fair value option of accounting under U.S. GAAP. The Bancorp has elected to measure certain
groups of loans held for sale under the fair value option, including certain residential mortgage loans originated as held for sale and certain
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
117 Fifth Third Bancorp
purchased commercial loans designated as held for sale at acquisition. For loans in which the Bancorp has not elected the fair value option,
the lower of cost or fair value is determined at the individual loan level.
The fair value of residential mortgage loans held for sale for which the fair value election has been made is estimated based upon mortgage-
backed securities prices and spreads to those prices or, for certain ARM loans, DCF models that may incorporate the anticipated portfolio
composition, credit spreads of asset-backed securities with similar collateral and market conditions. The anticipated portfolio composition
includes the effects of interest rate spreads and discount rates due to loan characteristics such as the state in which the loan was originated, the
loan amount and the ARM margin. These fair value marks are recorded as a component of noninterest income in mortgage banking net
revenue in the Consolidated Statements of Income. For residential mortgage loans that it has originated as held for sale, the Bancorp generally
has commitments to sell these loans in the secondary market. Gains or losses on sales are recognized in mortgage banking net revenue in the
Consolidated Statements of Income.
Management’s intent to sell residential mortgage loans classified as held for sale may change over time due to such factors as changes in the
overall liquidity in markets or changes in characteristics specific to certain loans held for sale. Consequently, these loans may be reclassified
to loans held for investment and, thereafter, reported within the Bancorp’s residential mortgage class of portfolio loans and leases. In such
cases, if the fair value option was elected, the residential mortgage loans will continue to be measured at fair value, which is based on
mortgage-backed securities prices, interest rate risk and an internally developed credit component.
Loans and leases held for sale are placed on nonaccrual status consistent with the Bancorp’s nonaccrual policies for portfolio loans and
leases.
Loan Sales and Securitizations
The Bancorp periodically sells loans through either securitizations or individual loan sales in accordance with its investment policies. The
sold loans are removed from the Consolidated Balance Sheet and a net gain or loss is recognized in the Consolidated Financial Statements at
the time of sale. The Bancorp typically isolates the loans through the use of a VIE and thus is required to assess whether the entity holding the
sold or securitized loans is a VIE and whether the Bancorp is the primary beneficiary and therefore consolidator of that VIE. If the Bancorp
holds the power to direct activities most significant to the economic performance of the VIE and has the obligation to absorb losses or right to
receive benefits that could potentially be significant to the VIE, then the Bancorp will generally be deemed the primary beneficiary of the
VIE. If the Bancorp is determined not to be the primary beneficiary of a VIE but holds a variable interest in the entity, such variable interests
are accounted for under the equity method of accounting or other accounting standards as appropriate. Refer to Note 12 for further
information on consolidated and non-consolidated VIEs.
The Bancorp’s loan sales and securitizations are generally structured with servicing retained, which often results in the recording of servicing
rights. The Bancorp may also purchase servicing rights. The Bancorp has elected to measure all existing classes of its residential mortgage
servicing rights portfolio at fair value with changes in the fair value of servicing rights reported in mortgage banking net revenue in the
Consolidated Statements of Income in the period in which the changes occur.
Servicing rights are valued using internal OAS models. Key economic assumptions used in estimating the fair value of the servicing rights
include the prepayment speeds of the underlying loans, the weighted-average life, the OAS and the weighted-average coupon rate, as
applicable. The primary risk of material changes to the value of the servicing rights resides in the potential volatility in the economic
assumptions used, particularly the prepayment speeds. In order to assist in the assessment of the fair value of servicing rights, the Bancorp
obtains external valuations of the servicing rights portfolio from third parties and participates in peer surveys that provide additional
confirmation of the reasonableness of the key assumptions utilized in the internal OAS model.
Fees received for servicing loans owned by investors are based on a percentage of the outstanding monthly principal balance of such loans
and are included in noninterest income in the Consolidated Statements of Income as loan payments are received. Costs of servicing loans are
charged to expense as incurred.
Reserve for Representation and Warranty Provisions
Conforming residential mortgage loans sold to unrelated third parties are generally sold with representation and warranty provisions. A
contractual liability arises only in the event of a breach of these representations and warranties and, in general, only when a loss results from
the breach. The Bancorp may be required to repurchase any previously sold loan or indemnify (make whole) the investor or insurer for which
the representation or warranty of the Bancorp proves to be inaccurate, incomplete or misleading. The Bancorp establishes a residential
mortgage repurchase reserve related to various representations and warranties that reflects management’s estimate of losses based on a
combination of factors.
The Bancorp’s estimation process requires management to make subjective and complex judgments about matters that are inherently
uncertain, such as future demand expectations, economic factors and the specific characteristics of the loans subject to repurchase. Such
factors incorporate historical investor audit and repurchase demand rates, appeals success rates, historical loss severity and any additional
information obtained from the GSEs regarding future mortgage repurchase and file request criteria. At the time of a loan sale, the Bancorp
records a representation and warranty reserve at the estimated fair value of the Bancorp’s guarantee and continually updates the reserve
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during the life of the loan as losses in excess of the reserve become probable and reasonably estimable. The provision for the estimated fair
value of the representation and warranty guarantee arising from the loan sales is recorded as an adjustment to the gain on sale, which is
included in other noninterest income in the Consolidated Statements of Income at the time of sale. Updates to the reserve are recorded in
other noninterest expense in the Consolidated Statements of Income.
Bank Premises and Equipment and Other Long-Lived Assets
Bank premises and equipment, including leasehold improvements, and operating lease equipment are carried at cost less accumulated
depreciation and accumulated amortization. Generally, depreciation is calculated using the straight-line method based on estimated useful
lives of the assets for book purposes, while accelerated depreciation is used for income tax purposes. Amortization of leasehold
improvements is generally computed using the straight-line method over the lives of the related leases or useful lives of the related assets,
whichever is shorter. Whenever events or changes in circumstances dictate, the Bancorp tests its long-lived assets for impairment by
determining whether the sum of the estimated undiscounted future cash flows attributable to a long-lived asset or asset group is less than the
carrying amount of the long-lived asset or asset group through a probability-weighted approach. In the event the carrying amount of the long-
lived asset or asset group is not recoverable, an impairment loss is measured as the amount by which the carrying amount of the long-lived
asset or asset group exceeds its fair value. Maintenance, repairs and minor improvements are charged to noninterest expense in the
Consolidated Statements of Income as incurred. Lease payments received for operating lease equipment are recognized in commercial
banking revenue in the Consolidated Statements of Income over the lease term on a straight-line basis unless another systematic and rational
basis is more representative of the pattern in which benefit is expected to be derived from use of the underlying equipment.
Lessee Accounting
ROU assets and lease liabilities are recognized for all leases unless the initial term of the lease is twelve months or less. Lease costs for
operating leases are recognized on a straight-line basis over the lease term unless another systematic basis is more representative of the
pattern of consumption. The lease term includes any renewal period that the Bancorp is reasonably certain to exercise. The Bancorp uses its
incremental borrowing rate to discount the lease payments if the rate implicit in the lease is not readily determinable. Variable lease payments
associated with operating leases are recognized in the period in which the obligation for payments is incurred.
For finance leases, the lease liability is measured using the effective interest method such that the liability is increased for interest based on
the discount rate that is implicit in the lease or the Bancorp’s incremental borrowing rate if the implicit rate cannot be readily determined,
offset by a decrease in the liability resulting from the periodic lease payments. The ROU asset associated with the finance lease is amortized
on a straight-line basis unless there is another systematic and rational basis that better reflects how the benefits of the underlying assets are
consumed over the lease term. The period over which the ROU asset is amortized is generally the lesser of the remaining lease term or the
remaining useful life of the leased asset. Variable lease payments associated with finance leases are recognized in the period in which the
obligation for those payments is incurred.
When the lease liability is remeasured to reflect changes to the lease payments as a result of a lease modification, the ROU asset is adjusted
for the amount of the lease liability remeasurement. If a lease modification reduces the scope of a lease, the ROU asset would be reduced
proportionately based on the change in the lease liability and the difference between the lease liability adjustment and the resulting ROU asset
adjustment would be recognized as a gain or loss in the Consolidated Statements of Income. Additionally, the amortization of the ROU asset
is adjusted prospectively from the date of remeasurement.
The Bancorp performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values
may not be recoverable. Any impairment loss is recognized in net occupancy expense in the Consolidated Statements of Income. Refer to the
Bank Premises and Equipment and Other Long-Lived Assets section of this note for further information.
Goodwill
Business combinations entered into by the Bancorp typically include the recognition of goodwill. U.S. GAAP requires goodwill to be tested
for impairment at the reporting unit level on an annual basis and more frequently if events or circumstances indicate that there may be
impairment. Historically, the Bancorp’s annual goodwill impairment test was performed as of September 30 of each year. However, in 2024,
the testing was performed as of September 30 and again as of October 1 to reflect the change in date in which the Bancorp will perform its
annual goodwill impairment testing in future periods. The Bancorp does not consider this change to be material, and the change in assessment
date did not delay, accelerate, or avoid a potential impairment charge. The new testing date is in close proximity to the previous assessment
date and the testing methods and valuation inputs were not significantly affected by the change, resulting in consistent conclusions.
Impairment exists when a reporting unit’s carrying amount of goodwill exceeds its implied fair value. In testing goodwill for impairment,
U.S. GAAP permits the Bancorp to first assess qualitative factors to determine whether it is more likely than not that the fair value of a
reporting unit is less than its carrying amount. In this qualitative assessment, the Bancorp evaluates events and circumstances which may
include, but are not limited to, the general economic environment, banking industry and market conditions, the overall financial performance
of the Bancorp, the performance of the Bancorp’s common stock, the key financial performance metrics of the Bancorp’s reporting units and
events affecting the reporting units to determine if it is not more likely than not that the fair value of a reporting unit is less than its carrying
amount. If the quantitative impairment test is required or the decision to bypass the qualitative assessment is elected, the Bancorp performs
the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying
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119 Fifth Third Bancorp
amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total
amount of goodwill allocated to that reporting unit. A recognized impairment loss cannot be reversed in future periods even if the fair value
of the reporting unit subsequently recovers.
The fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market
participants at the measurement date. As none of the Bancorp’s reporting units are publicly traded, individual reporting unit fair value
determinations cannot be directly correlated to the Bancorp’s stock price. The determination of the fair value of a reporting unit is a
subjective process that involves the use of estimates and judgments, particularly related to cash flows, the appropriate discount rates and an
applicable control premium. The determination of the fair value of the Bancorp’s reporting units includes both an income-based approach and
a market-based approach. The income-based approach utilizes the reporting unit’s forecasted cash flows (including a terminal value approach
to estimate cash flows beyond the final year of the forecast) and the reporting unit’s estimated cost of equity as the discount rate. Significant
management judgment is necessary in the preparation of each reporting unit’s forecasted cash flows surrounding expectations for earnings
projections, growth and credit loss expectations and actual results may differ from forecasted results. Additionally, the Bancorp determines its
market capitalization based on the average of the closing price of the Bancorp’s stock during the period beginning September 1 and ending on
the measurement date, incorporating an additional control premium, and compares this market-based fair value measurement to the aggregate
fair value of the Bancorp’s reporting units in order to corroborate the results of the income approach. Refer to Note 10 for further information
regarding the Bancorp’s goodwill.
Tax Credit Investments
The Bancorp invests in projects to create affordable housing and revitalize business and residential areas. These investments are classified as
other assets on the Bancorp’s Consolidated Balance Sheets. Investments in projects that qualify for Low-Income Housing Tax Credits, New
Markets Tax Credits and Rehabilitation Investment Tax Credits are accounted for using the proportional amortization method if certain
conditions are met. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits
and other benefits received and recognized as a component of applicable income tax expense in the Consolidated Statements of Income.
Investments which do not meet the qualification criteria for the proportional amortization method are accounted for using the equity method
of accounting with impairment associated with the investments recognized in other noninterest expense in the Consolidated Statements of
Income.
Derivative Financial Instruments and Hedge Accounting
The Bancorp accounts for its derivatives as either assets or liabilities measured at fair value through adjustments to AOCI and/or current
earnings, as appropriate. The related cash flows are classified as operating activities in the Consolidated Statements of Cash Flows. On the
date the Bancorp enters into a derivative contract, the Bancorp designates the derivative instrument as either a fair value hedge, cash flow
hedge or as a free-standing derivative instrument. For a fair value hedge, changes in the fair value of the derivative instrument and changes in
the fair value of the hedged asset or liability attributable to the hedged risk are recorded in current period net income. For a cash flow hedge,
changes in the fair value of the derivative instrument are recorded in AOCI and subsequently reclassified to net income in the same period(s)
that the hedged transaction impacts net income. For free-standing derivative instruments, changes in fair values are reported in current period
net income.
When entering into a hedge transaction, the Bancorp formally documents the relationship between the hedging instrument and the hedged
item, as well as the risk management objective and strategy for undertaking the hedge transaction before the end of the quarter in which the
transaction is consummated. This process includes linking the derivative instrument designated as a fair value or cash flow hedge to a specific
asset or liability on the balance sheet or to specific forecasted transactions and the risk being hedged, along with a formal assessment at the
inception of the hedge as to the effectiveness of the derivative instrument in offsetting changes in fair values or cash flows of the hedged item.
The Bancorp continues to assess hedge effectiveness on an ongoing basis using either a qualitative or a quantitative assessment (regression
analysis). Additionally, the Bancorp may also utilize the shortcut method to evaluate hedge effectiveness for certain qualifying hedges with
matched terms that permit the assumption of perfect offset. If the shortcut method is no longer appropriate, the Bancorp would apply the
long-haul method identified at inception of the hedging transaction for assessing hedge effectiveness as long as the hedge is highly effective.
If it is determined that the derivative instrument is not highly effective as a hedge, hedge accounting is discontinued. For fair value hedges, if
hedge accounting is discontinued, the cumulative basis adjustments related to the hedged asset or liability are amortized to earnings in the
same manner as other components of the carrying amount of that asset or liability. For cash flow hedges, upon discontinuation of hedge
accounting, any amounts in AOCI related to that relationship should affect earnings at the same time and in the same manner in which the
hedged transaction affects earnings. However, if it becomes probable that the forecasted transaction will not occur, any related amounts in
AOCI are reclassified to earnings immediately.
Other Real Estate Owned
OREO, which is included in other assets in the Consolidated Balance Sheets, represents property acquired through foreclosure or other
proceedings and branch-related real estate no longer intended to be used for banking purposes. OREO is carried at the lower of cost or fair
value, less costs to sell. All OREO property is periodically evaluated for impairment and decreases in carrying value are recognized as
reductions in other noninterest income in the Consolidated Statements of Income. For government-guaranteed mortgage loans, upon
foreclosure, a separate other receivable is recognized if certain conditions are met for the amount of the loan balance (principal and interest)
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120 Fifth Third Bancorp
expected to be recovered from the guarantor. This receivable is also included in other assets, separate from OREO, in the Consolidated
Balance Sheets.
Deposits
Deposits generally include the unpaid balance of cash or its equivalent received or held by the Bank for its commercial and consumer
customers. Deposits are classified as either transactional or non-transactional and include both interest-bearing and noninterest-bearing
balances. Interest expense incurred on interest-bearing deposits is recognized in accordance with applicable guidance in U.S. GAAP for these
liabilities and includes certain ongoing deposit placement fees paid on custodial accounts.
Legal Contingencies
The Bancorp and its subsidiaries are parties to numerous claims and lawsuits as well as threatened or potential actions or claims concerning
matters arising from the conduct of its business activities. The outcome of claims or litigation and the timing of ultimate resolution are
inherently difficult to predict and significant judgment may be required in the determination of both the probability of loss and whether the
amount of the loss is reasonably estimable. The Bancorp’s estimates are subjective and are based on the status of legal and regulatory
proceedings, the merit of the Bancorp’s defenses and consultation with internal and external legal counsel. An accrual for a potential
litigation loss is established when information related to the loss contingency indicates both that a loss is probable and that the amount of loss
can be reasonably estimated. This accrual is included in other liabilities in the Consolidated Balance Sheets and is adjusted from time to time
as appropriate to reflect changes in circumstances. Legal expenses are recorded in other noninterest expense in the Consolidated Statements
of Income.
Income Taxes
The Bancorp accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and
liabilities for expected future tax consequences. Under the asset and liability method, deferred tax assets and liabilities are determined by
applying the federal and state tax rates to the differences between financial statement carrying amounts and the corresponding tax bases of
assets and liabilities. Deferred tax assets are also recorded for any tax attributes, such as tax credits and net operating loss carryforwards. The
net balances of deferred tax assets and liabilities are reported in other assets and accrued taxes, interest and expenses in the Consolidated
Balance Sheets. Any effect of a change in federal or state tax rates on deferred tax assets and liabilities is recognized in income tax expense in
the period that includes the enactment date. The Bancorp reflects the expected amount of income tax to be paid or refunded during the year as
current income tax expense or benefit. Accrued taxes represent the net expected amount due to and/or from taxing jurisdictions and are
reported in accrued taxes, interest and expenses in the Consolidated Balance Sheets. The Bancorp uses the deferral method of accounting on
investments that generate investment tax credits. Under this method, the investment tax credits are recognized as a reduction to the related
asset.
The Bancorp evaluates the realization of deferred tax assets based on all positive and negative evidence available at the balance sheet date.
Realization of deferred tax assets is based on the Bancorp’s judgment about relevant factors affecting their realization, including the taxable
income within any applicable carry back periods, future projected taxable income, the reversal of taxable temporary differences and tax
planning strategies. The Bancorp records a valuation allowance for deferred tax assets where the Bancorp does not believe that it is more
likely than not that the deferred tax assets will be realized.
Income tax benefits from uncertain tax positions are recognized in the financial statements only if the Bancorp believes that it is more likely
than not that the uncertain tax position will be sustained based solely on the technical merits of the tax position and consideration of the
relevant taxing authority’s widely understood administrative practices and precedents. If the Bancorp does not believe that it is more likely
than not that an uncertain tax position will be sustained, the Bancorp records a liability for the uncertain tax position. If the Bancorp believes
that it is more likely than not that an uncertain tax position will be sustained, the Bancorp only records a tax benefit for the portion of the
uncertain tax position where the likelihood of realization is greater than 50% upon settlement with the relevant taxing authority that has full
knowledge of all relevant information. The Bancorp recognizes interest expense, interest income and penalties related to unrecognized tax
benefits within applicable income tax expense in the Consolidated Statements of Income. Refer to Note 21 for further discussion regarding
income taxes.
Fair Value Measurements
The Bancorp measures certain financial assets and liabilities at fair value in accordance with U.S. GAAP, which defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The Bancorp employs various valuation approaches to measure fair value including the market, income and cost approaches. The
market approach uses prices or relevant information generated by market transactions involving identical or comparable assets or liabilities.
The income approach involves discounting future amounts to a single present amount and is based on current market expectations about those
future amounts. The cost approach is based on the amount that currently would be required to replace the service capacity of the asset.
U.S. GAAP establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad
levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). A financial instrument’s categorization within the fair value hierarchy is based upon the
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121 Fifth Third Bancorp
lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are
described as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Bancorp has the ability to access at the
measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities
in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived
principally from or corroborated by observable market data by correlation or other means.
Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable
inputs reflect the Bancorp’s own assumptions about what market participants would use to price the asset or liability. The inputs are
developed based on the best information available in the circumstances, which might include the Bancorp’s own financial data such as
internally developed pricing models and DCF methodologies, as well as instruments for which the fair value determination requires
significant management judgment.
The Bancorp’s fair value measurements involve various valuation techniques and models, which involve inputs that are observable, when
available. Valuation techniques and parameters used for measuring assets and liabilities are reviewed and validated by the Bancorp on a
quarterly basis. Additionally, the Bancorp monitors the fair values of significant assets and liabilities using a variety of methods including the
evaluation of pricing runs and exception reports based on certain analytical criteria, comparison to previous trades and overall review and
assessments for reasonableness. The Bancorp may, as a practical expedient, measure the fair value of certain investments on the basis of the
net asset value per share of the investment, or its equivalent. Any investments which are valued using this practical expedient are not
classified in the fair value hierarchy. Refer to Note 28 for further information on fair value measurements.
Revenue Recognition
The Bancorp’s interest income is derived from loans and leases, investment securities and other short-term investments. The Bancorp
recognizes interest income in accordance with the applicable guidance in U.S. GAAP for these assets. Refer to the Portfolio Loans and Leases
and Investment Securities sections of this footnote for further information.
The Bancorp generally measures noninterest income revenue based on the amount of consideration the Bancorp expects to be entitled for the
transfer of goods or services to a customer, then recognizes this revenue when or as the Bancorp satisfies its performance obligations under
the contract, except in transactions where U.S. GAAP provides other applicable guidance. When the amount of consideration is variable, the
Bancorp will only recognize revenue to the extent that it is probable that the cumulative amount recognized will not be subject to a significant
reversal in the future. Substantially all of the Bancorp’s contracts with customers have expected durations of one year or less and payments
are typically due when or as the services are rendered or shortly thereafter. When third parties are involved in providing goods or services to
customers, the Bancorp recognizes revenue on a gross basis when it has control over those goods or services prior to transfer to the customer;
otherwise, revenue is recognized for the net amount of any fee or commission. The Bancorp excludes sales taxes from the recognition of
revenue and recognizes the incremental costs of obtaining contracts as an expense if the period of amortization for those costs would be one
year or less. The following provides additional information about the components of noninterest income:
•
Wealth and asset management revenue consists primarily of service fees for investment management, custody, and trust
administration services provided to commercial and consumer clients. The Bancorp’s performance obligations for these services are
generally satisfied over time and revenues are recognized monthly based on the fee structure outlined in individual contracts.
Transaction prices are most commonly based on the market value of assets under management or care and/or a fee per transaction
processed. The Bancorp also offers certain services for which the performance obligations are satisfied and revenue is recognized at
a point in time, when the services are performed. Wealth and asset management revenue also includes trailing commissions received
from investments and annuities held in customer accounts, which are recognized in revenue when the Bancorp determines that it has
satisfied its performance obligations and has sufficient information to estimate the amount of the commissions to which it expects to
be entitled.
•
Commercial payments revenue consists primarily of treasury management fees for commercial clients, monthly service charges on
commercial deposit accounts and revenue related to commercial cards associated with commercial client relationships. The
Bancorp’s treasury management fees include revenues for traditional treasury management services as well as embedded payments
services. Monthly service charges are typically collected from customers directly from the related deposit account at the time the
transaction is processed and/or at the end of the customer’s statement cycle (typically monthly). Commercial card revenue includes
interchange fees earned when commercial cards are processed through card association networks, revenue derived from the
Bancorp’s relationships with card processors and transaction-based fees charged directly to commercial clients. The performance
obligations for treasury management fees and service charges on deposits are typically satisfied over time while performance
obligations for transaction-based fees are typically satisfied at a point in time when the transactions generating the fees are
processed. Revenues are recognized on an accrual basis when or as the services are provided to the customer, net of applicable
discounts, waivers, reversals, and costs not controlled by the Bancorp (primarily interchange fees charged by credit card
associations and expenses of certain transaction-based rewards programs offered to customers).
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•
Consumer banking revenue consists primarily of interchange fees earned when the Bancorp’s consumer credit and debit cards are
processed through card association networks, monthly service charges on consumer deposit accounts and other deposit account-
related charges, transaction-based fees (such as late fees, overdraft fees and wire transfer fees) for consumer loans and deposits, and
fees related to ancillary services provided to consumers. The Bancorp’s performance obligations for transaction-based fees are
typically satisfied at a point in time when the transactions generating the fees are processed while performance obligations for
consumer deposit account service charges are typically satisfied over time. Revenues are recognized on an accrual basis when or as
the services are provided to the customer, net of applicable discounts, waivers, reversals, and certain costs not controlled by the
Bancorp (primarily interchange fees charged by credit card associations and expenses of certain transaction-based rewards programs
offered to customers). Revenue related to consumer loans is recognized in accordance with the Bancorp’s policies for portfolio
loans and leases.
•
Capital markets fees consist primarily of underwriting revenue recognized by the Bancorp’s broker-dealer subsidiary, syndication
fees for commercial loans, merger and acquisition advisory fees and income earned related to financial risk management services
provided to commercial clients. Underwriting revenue is generally recognized on the trade date, which is when the Bancorp’s
performance obligations are satisfied. Syndication fees are recognized in income when the syndication is complete unless a portion
of the loan is retained in the transaction, in which case the Bancorp’s policies for portfolio loans and leases would apply. Merger
and acquisition advisory fees are recognized in income at a point in time when the transactions generating the fees are completed.
Income from financial risk management services is primarily related to customer accommodation derivatives and is recognized in
accordance with the Bancorp’s policies for derivative financial instruments.
•
Commercial banking revenue consists primarily of service fees and other income related to lending activity to commercial clients
and leasing business revenue, which includes operating lease income, lease remarketing fees and lease syndication fees. Revenue
related to loans and leases is recognized in accordance with either the Bancorp’s policies for portfolio loans and leases or when the
Bancorp’s performance obligations are satisfied.
•
Mortgage banking net revenue consists primarily of origination fees and gains on loan sales, mortgage servicing fees and the impact
of MSRs. Refer to the Loans and Leases Held for Sale and Loan Sales and Securitizations sections of this footnote for further
information.
•
Other noninterest income primarily includes BOLI income, private equity income, gains and losses on other assets and other
miscellaneous revenues and gains.
Earnings Per Share
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of
common stock outstanding during the period. Earnings per diluted share is computed by dividing adjusted net income available to common
shareholders by the weighted-average number of shares of common stock outstanding, adjusted for the impact of potentially dilutive common
shares arising from the exercise or settlement of stock-based awards and the settlement of outstanding forward contracts.
The Bancorp calculates earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that
determines earnings per share separately for common stock and participating securities according to dividends declared and participation
rights in undistributed earnings. For purposes of calculating earnings per share under the two-class method, restricted shares that contain
nonforfeitable rights to dividends are considered participating securities until vested. While the dividends declared per share on such
restricted shares are the same as dividends declared per common share outstanding, the dividends recognized on such restricted shares may be
less because dividends paid on restricted shares that are expected to be forfeited are reclassified to compensation expense during the period
when forfeiture is expected.
Pension Plans
The Bancorp uses an expected long-term rate of return applied to the fair market value of assets as of the beginning of the year and the
expected cash flow during the year for calculating the expected investment return on all pension plan assets. Amortization of the net gain or
loss resulting from experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet
reflected in market-related value) is included as a component of net periodic benefit cost. If, as of the beginning of the year, that net gain or
loss exceeds 10% of the greater of the projected benefit obligation and the market-related value of plan assets, the amortization is that excess
divided by the average remaining service period of participating employees expected to receive benefits under the plan. The Bancorp uses a
third-party actuary to compute the remaining service period of participating employees. This period reflects expected turnover, pre-
retirement mortality and other applicable employee demographics.
Stock-Based Compensation
The Bancorp recognizes compensation expense for the grant-date fair value of stock-based awards that are expected to vest over the requisite
service period. All awards, both those with cliff vesting and graded vesting, are expensed on a straight-line basis over the requisite service
period. Awards to employees that meet eligible retirement status are expensed immediately. As compensation expense is recognized, a
deferred tax asset is recorded that represents an estimate of the future tax deduction from exercise or release of restrictions. At the time
awards are exercised, cancelled, expire or restrictions are released, the Bancorp recognizes an adjustment to income tax expense for the
difference between the previously estimated tax deduction and the actual tax deduction realized. For further information on the Bancorp’s
stock-based compensation plans, refer to Note 25.
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123 Fifth Third Bancorp
Other
Securities and other property held in a trust or fiduciary capacity by divisions of the Bancorp’s banking subsidiary are not included in the
Consolidated Balance Sheets because such items are not assets of the subsidiaries.
Other short-term investments have original maturities less than one year and primarily include interest-bearing balances that are funds on
deposit at other depository institutions or the FRB. The Bancorp uses other short-term investments as part of its liquidity risk management
activities.
The Bancorp purchases life insurance policies on the lives of certain directors, officers and employees and is the owner and beneficiary of the
policies. The Bancorp invests in these policies, known as BOLI, to provide an efficient form of funding for long-term retirement and other
employee benefits costs. Certain BOLI policies have a stable value agreement through either a large, well-rated bank or multi-national
insurance carrier that provides limited cash surrender value protection from declines in the value of each policy’s underlying investments.
The Bancorp records these BOLI policies within other assets in the Consolidated Balance Sheets at each policy’s respective cash surrender
value, with changes recorded in other noninterest income in the Consolidated Statements of Income.
Intangible assets are amortized on either a straight-line or an accelerated basis over their estimated useful lives and, based on the type of
intangible asset, the amortization expense may be recorded in either commercial banking revenue or other noninterest expense in the
Consolidated Statements of Income. The Bancorp reviews intangible assets for impairment whenever events or changes in circumstances
indicate that carrying amounts may not be recoverable.
Securities sold under repurchase agreements are accounted for as secured borrowings and included in other short-term borrowings in the
Consolidated Balance Sheets at the amounts at which the securities were sold plus accrued interest.
Acquisitions of treasury stock are carried at cost and are subject to a non-deductible excise tax of 1% of the net fair market value of stock
repurchased during a given tax year. The amount of taxable repurchases is reduced by the fair market value of stock which is issued within
the same tax year, including stock issued as part of stock-based compensation plans. The Bancorp accounts for this excise tax as a cost of
acquiring treasury stock and includes the estimated incremental tax liability associated with individual share repurchase transactions as part of
the cost basis of the shares repurchased. Reissuance of shares in treasury for acquisitions, exercises of stock-based awards or other corporate
purposes is recorded based on the specific identification method.
Advertising costs are generally expensed as incurred.
ACCOUNTING AND REPORTING DEVELOPMENTS
Standards Adopted in 2024
The Bancorp adopted the following new accounting standards effective January 1, 2024:
ASU 2022-03 – Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
In June 2022, the FASB issued ASU 2022-03, which clarifies the guidance in ASC 820 on the fair value measurement of an equity security
that is subject to contractual sale restrictions, stating that such restrictions are not considered part of the unit of account of the security and
therefore are not considered in measuring fair value. The amended guidance also requires disclosure of the fair value of equity securities
subject to contractual sale restrictions and certain additional information about those restrictions. The Bancorp adopted the amended guidance
on January 1, 2024 on a prospective basis. The adoption did not have a material impact on the Bancorp’s Consolidated Financial Statements.
ASU 2023-02 – Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the
Proportional Amortization Method
In March 2023, the FASB issued ASU 2023-02, which expands the permitted usage of the proportional amortization method to include
additional tax credit investment programs beyond qualifying LIHTC structures if certain conditions are met. The amended guidance permits
entities to make elections to apply the proportional amortization method on a program-by-program basis for qualifying programs and also
makes certain amendments to measurement and disclosure guidance. The amended disclosure guidance applies to all investments within
programs where the proportional amortization method has been elected, including investments within those programs which do not meet the
criteria to permit application of the proportional amortization method. The Bancorp adopted the amended guidance on January 1, 2024 on a
modified retrospective basis, except for certain provisions which the Bancorp adopted on a prospective basis, as permitted. Upon adoption,
the Bancorp recorded a cumulative-effect adjustment to decrease retained earnings by $10 million, net of tax.
ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, which amends the disclosure requirements for reportable segments. The amendments
include new requirements to disclose certain significant segment expenses and other items, the title and position of the chief operating
decision maker and information about how the reported measures of segment profit or loss are used in assessing segment performance. The
amendments also make certain annual disclosure requirements applicable to interim periods and permit the reporting of multiple measures of
segment profit or loss if appropriate. The Bancorp implemented the amended guidance on a retrospective basis beginning with this Annual
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
124 Fifth Third Bancorp
Report on Form 10-K for the year ended December 31, 2024 and will also apply the amended guidance to interim reporting periods beginning
in 2025. The amended disclosures are presented in Note 31.
Significant Accounting Standards Issued but Not Yet Adopted
The following significant accounting standards were issued but not yet adopted by the Bancorp as of December 31, 2024:
ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, which amends the disclosure requirements for income taxes. The amendments primarily
include new requirements to disclose additional information as part of the reconciliation of the effective tax rate to statutory tax rates, provide
the amount of income taxes paid, net of refunds received, and income tax expense disaggregated between federal, state and foreign
jurisdictions and provide income before income taxes disaggregated between domestic and foreign jurisdictions. The amendments also
discontinue certain other disclosure requirements. The Bancorp adopted the amended guidance on January 1, 2025 on a prospective basis and
will provide the amended disclosures within its Annual Report on Form 10-K for the year ended December 31, 2025.
ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, which introduces new requirements to disclose additional information about certain types
of expenses, including employee compensation, depreciation, intangible asset amortization and selling expenses. The amended guidance is
effective for the Bancorp for the year ending December 31, 2027 and subsequent interim reporting periods beginning in 2028, with early
adoption permitted, and is to be applied prospectively, with retrospective application permitted. The Bancorp is in the process of evaluating
the impact of the amended guidance on its Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
125 Fifth Third Bancorp
2. Supplemental Cash Flow Information
Cash payments related to interest and income taxes in addition to non-cash investing and financing activities are presented in the following
table for the years ended December 31:
($ in millions)
2024
2023
2022
Cash Payments:
Interest
$
4,871
3,776
869
Income taxes
195
655
272
Transfers:
Portfolio loans and leases to loans and leases held for sale
$
422
513
105
Loans and leases held for sale to portfolio loans and leases
4
6
409
Portfolio loans and leases to OREO
23
12
8
Bank premises and equipment to OREO
9
30
24
Available-for-sale debt securities to held-to-maturity securities(a)
11,593
—
—
Supplemental Disclosures:
Net additions to lease liabilities under operating leases
$
74
72
152
Net additions (reductions) to lease liabilities under finance leases
44
(6)
27
(a)
Represents the fair value of the securities on the date of transfer. Refer to Note 4 for additional information.
3. Restrictions on Dividends and Capital Actions
Restrictions on Cash Dividends
The principal source of income and funds for the Bancorp (parent company) are dividends from its subsidiaries. The dividends paid by the
Bancorp’s banking subsidiary are subject to regulations and limitations prescribed by state and federal supervisory agencies. The Bancorp’s
indirect banking subsidiary paid the Bancorp’s direct nonbank subsidiary holding company, which in turn paid the Bancorp, $1.8 billion in
dividends during both the years ended December 31, 2024 and 2023. The Bancorp’s nonbank subsidiaries are also limited by certain federal
and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year.
Capital Actions
The Bancorp is subject to restrictions on its capital actions, primarily as a result of supervisory policies set by the FRB. The Bancorp is
required to develop and maintain a capital plan that governs its capacity to pay dividends and execute share repurchases and this plan is
required to be submitted to the FRB periodically. As part of its capital plan, the Bancorp increased its quarterly common stock dividend to
$0.37 per share in the third quarter of 2024. Additionally, the Bancorp entered into and settled accelerated share repurchase transactions
during the year ended December 31, 2024. For more information related to these transactions, refer to Note 24.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
126 Fifth Third Bancorp
4. Investment Securities
The Bancorp uses investment securities as a means of managing interest rate risk, providing collateral for pledging purposes and for liquidity
risk management. The Bancorp may also utilize investment securities as part of a non-qualifying hedging strategy to manage interest rate risk
related to MSRs.
The following tables provide the amortized cost, unrealized gains and losses and fair value for the major categories of the available-for-
sale debt and other securities and held-to-maturity securities portfolios as of December 31:
2024
($ in millions)
Amortized Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities
$
4,358
2
—
4,360
Obligations of states and political subdivisions securities
—
—
—
—
Mortgage-backed securities:
Agency residential mortgage-backed securities
6,460
—
(779)
5,681
Agency commercial mortgage-backed securities
23,853
1
(3,022)
20,832
Non-agency commercial mortgage-backed securities
4,505
—
(338)
4,167
Asset-backed securities and other debt securities
3,924
3
(198)
3,729
Other securities(a)
778
—
—
778
Total available-for-sale debt and other securities
$
43,878
6
(4,337)
39,547
Held-to-maturity securities:(b)
U.S. Treasury and federal agencies securities
$
2,370
—
(26)
2,344
Mortgage-backed securities:
Agency residential mortgage-backed securities
4,898
—
(197)
4,701
Agency commercial mortgage-backed securities
4,008
—
(90)
3,918
Asset-backed securities and other debt securities
2
—
—
2
Total held-to-maturity securities
$
11,278
—
(313)
10,965
(a)
Other securities consist of FHLB, FRB and DTCC restricted stock holdings of $276, $500 and $2, respectively, at December 31, 2024, that are carried at cost.
(b)
The amortized cost basis includes a discount of $865 at December 31, 2024 pertaining to the remaining unamortized portion of unrealized losses on securities
transferred to HTM.
2023
($ in millions)
Amortized Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities
$
4,477
1
(142)
4,336
Obligations of states and political subdivisions securities
2
—
—
2
Mortgage-backed securities:
Agency residential mortgage-backed securities
11,564
—
(1,282)
10,282
Agency commercial mortgage-backed securities
28,945
5
(3,230)
25,720
Non-agency commercial mortgage-backed securities
4,872
—
(427)
4,445
Asset-backed securities and other debt securities
5,207
3
(298)
4,912
Other securities(a)
722
—
—
722
Total available-for-sale debt and other securities
$
55,789
9
(5,379)
50,419
Held-to-maturity securities:
Asset-backed securities and other debt securities
$
2
—
—
2
Total held-to-maturity securities
$
2
—
—
2
(a)
Other securities consist of FHLB, FRB and DTCC restricted stock holdings of $224, $496 and $2, respectively, at December 31, 2023, that are carried at cost.
The following table provides the fair value of trading debt securities and equity securities as of December 31:
($ in millions)
2024
2023
Trading debt securities
$
1,185
899
Equity securities
341
613
The amounts reported in the preceding tables exclude accrued interest receivable on investment securities of $162 million and $146 million at
December 31, 2024 and 2023, respectively, which is presented as a component of other assets in the Consolidated Balance Sheets.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
127 Fifth Third Bancorp
In January 2024, the Bancorp transferred $12.6 billion (amortized cost basis) of securities from available-for-sale to held-to-maturity to
reflect the Bancorp’s change in intent to hold these securities to maturity in order to reduce potential capital volatility associated with
investment security market price fluctuations. AOCI included pretax unrealized losses of $994 million on these securities at the date of
transfer. The unrealized losses that existed on the date of transfer will continue to be reported as a component of AOCI and will be amortized
into income over the remaining life of the securities as an adjustment to yield, offsetting the amortization of the discount resulting from the
transfer recorded at fair value. The amortized cost basis of held-to-maturity securities included a discount of $865 million at December 31,
2024 pertaining to the unamortized portion of unrealized losses on securities, which are offset in AOCI.
The following table presents the components of net securities gains and losses recognized in the Consolidated Statements of Income,
including those recognized related to the Bancorp’s non-qualifying hedging strategy for MSRs, for the years ended December 31:
($ in millions)
2024
2023
2022
Available-for-sale debt and other securities:
Realized gains
$
5
34
16
Realized losses
(2)
(30)
(13)
Impairment losses
(21)
(5)
(1)
Net (losses) gains on available-for-sale debt and other securities
$
(18)
(1)
2
Trading debt securities:
Net realized losses
—
—
(2)
Net unrealized gains
—
3
11
Net trading debt securities gains
$
—
3
9
Equity securities:
Net realized gains
15
5
1
Net unrealized gains (losses)
18
11
(96)
Net equity securities gains (losses)
$
33
16
(95)
Total gains (losses) recognized in income from available-for-sale debt and other securities,
trading debt securities and equity securities(a)
$
15
18
(84)
(a)
Excludes $5 and $13 of net securities gains for the years ended December 31, 2024 and 2023, respectively, and an immaterial amount of net securities losses for
the year ended December 31, 2022 related to securities held by FTS to facilitate the timely execution of customer transactions. These gains and losses are
included in capital markets fees and wealth and asset management revenue in the Consolidated Statements of Income.
The Bancorp recognized impairment losses on available-for-sale debt and other securities of $21 million, $5 million and $1 million during the
years ended December 31, 2024, 2023 and 2022, respectively. These losses were included in securities gains (losses), net, in the Consolidated
Statements of Income and related to certain securities in unrealized loss positions where the Bancorp had determined that it no longer
intended to hold the securities until the recovery of their amortized cost bases.
At both December 31, 2024 and 2023, the Bancorp did not recognize an allowance for credit losses for its investment securities. The Bancorp
also did not recognize provision for credit losses for investment securities during the years ended December 31, 2024, 2023 and 2022.
At December 31, 2024 and 2023, investment securities with a fair value of $30.0 billion and $25.2 billion, respectively, were pledged to
secure borrowing capacity, public deposits, trust funds, derivative contracts and for other purposes as required or permitted by law.
The expected maturity distribution of the Bancorp’s mortgage-backed securities and the contractual maturity distribution of the remainder of
the Bancorp’s available-for-sale debt and other securities and held-to-maturity securities as of December 31, 2024 are shown in the following
table:
Available-for-Sale Debt and Other
Held-to-Maturity
($ in millions)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Debt securities:(a)
Due in 1 year or less
$
3,682
3,666
37
38
Due after 1 year through 5 years
16,586
15,643
3,231
3,191
Due after 5 years through 10 years
16,262
13,830
7,549
7,286
Due after 10 years
6,570
5,630
461
450
Other securities
778
778
—
—
Total
$
43,878
39,547
11,278
10,965
(a)
Actual maturities may differ from contractual maturities when a right to call or prepay obligations exists with or without call or prepayment penalties.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
128 Fifth Third Bancorp
The following table provides the fair value and gross unrealized losses on available-for-sale debt and other securities in an unrealized loss
position, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as
of December 31:
Less than 12 months
12 months or more
Total
($ in millions)
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
2024
U.S. Treasury and federal agencies securities
$
569
—
—
—
569
—
Agency residential mortgage-backed securities
1,061
(14)
4,566
(765)
5,627
(779)
Agency commercial mortgage-backed securities
157
(6)
20,536
(3,016)
20,693
(3,022)
Non-agency commercial mortgage-backed securities
183
(3)
3,984
(335)
4,167
(338)
Asset-backed securities and other debt securities
283
(11)
3,157
(187)
3,440
(198)
Total
$
2,253
(34)
32,243
(4,303)
34,496
(4,337)
2023
U.S. Treasury and federal agencies securities
$
1,989
(3)
2,157
(139)
4,146
(142)
Agency residential mortgage-backed securities
81
(2)
10,200
(1,280)
10,281
(1,282)
Agency commercial mortgage-backed securities
5,439
(556)
19,957
(2,674)
25,396
(3,230)
Non-agency commercial mortgage-backed securities
141
(2)
4,284
(425)
4,425
(427)
Asset-backed securities and other debt securities
340
(17)
4,184
(281)
4,524
(298)
Total
$
7,990
(580)
40,782
(4,799)
48,772
(5,379)
At December 31, 2024 and 2023, $34 million and $45 million, respectively, of unrealized losses in the available-for-sale debt and other
securities portfolio were related to non-rated securities.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
129 Fifth Third Bancorp
5. Loans and Leases
The Bancorp diversifies its loan and lease portfolio by offering a variety of loan and lease products with various payment terms and rate
structures. The Bancorp’s commercial loan and lease portfolio consists of lending to various industry types. Management periodically reviews
the performance of its loan and lease products to evaluate whether they are performing within acceptable interest rate and credit risk levels
and changes are made to underwriting policies and procedures as needed. The Bancorp maintains an allowance to absorb loan and lease
losses that are expected to be incurred over the remaining contractual terms of the related loans and leases. For further information on credit
quality and the ALLL, refer to Note 6.
The following table provides a summary of commercial loans and leases classified by primary purpose and consumer loans classified based
upon product or collateral as of December 31:
($ in millions)
2024
2023
Loans and leases held for sale:
Commercial and industrial loans
$
15
41
Commercial mortgage loans
22
—
Commercial construction loans
29
—
Commercial leases
—
3
Residential mortgage loans
574
334
Total loans and leases held for sale
$
640
378
Portfolio loans and leases:
Commercial and industrial loans
$
52,271
53,270
Commercial mortgage loans
12,246
11,276
Commercial construction loans
5,588
5,621
Commercial leases
3,188
2,579
Total commercial loans and leases
$
73,293
72,746
Residential mortgage loans
$
17,543
17,026
Home equity
4,188
3,916
Indirect secured consumer loans
16,313
14,965
Credit card
1,734
1,865
Solar energy installation loans
4,202
3,728
Other consumer loans
2,518
2,988
Total consumer loans
$
46,498
44,488
Total portfolio loans and leases
$
119,791
117,234
Portfolio loans and leases are recorded net of unearned income, which totaled $380 million and $272 million as of December 31, 2024 and
2023, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $566 million and $593 million at
December 31, 2024 and 2023, respectively, which is presented as a component of other assets in the Consolidated Balance Sheets.
Additionally, portfolio loans and leases are recorded net of unamortized premiums and discounts, deferred direct loan origination fees and
costs associated with loans and valuation adjustments associated with loans measured at fair value. These items totaled a net discount of $324
million and $395 million as of December 31, 2024 and 2023, respectively, of which $901 million and $865 million of net discount was
related to solar energy installation loans, respectively.
The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $15.1 billion and $14.5 billion as of
December 31, 2024 and 2023, respectively, pledged to the FHLB, and loans of $55.3 billion and $49.3 billion at December 31, 2024 and
2023, respectively, pledged to the FRB.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
130 Fifth Third Bancorp
The following table presents a summary of the total loans and leases owned by the Bancorp and net charge-offs (recoveries) as of and for the
years ended December 31:
Carrying Value
90 Days Past Due
and Still Accruing(a)
Net Charge-Offs (Recoveries)
($ in millions)
2024
2023
2024
2023
2024
2023
Commercial and industrial loans
$
52,286
53,311
5
8
242
155
Commercial mortgage loans
12,268
11,276
—
—
—
(2)
Commercial construction loans
5,617
5,621
—
—
—
1
Commercial leases
3,188
2,582
1
—
2
(1)
Residential mortgage loans
18,117
17,360
6
7
(2)
—
Home equity
4,188
3,916
—
—
(1)
1
Indirect secured consumer loans
16,313
14,965
—
—
90
72
Credit card
1,734
1,865
20
21
68
64
Solar energy installation loans
4,202
3,728
—
—
56
26
Other consumer loans
2,518
2,988
—
—
77
72
Total loans and leases
$
120,431
117,612
32
36
532
388
Less: Loans and leases held for sale
640
378
Total portfolio loans and leases
$
119,791
117,234
(a)
Excludes government guaranteed residential mortgage loans.
The following table presents the components of the net investment in portfolio leases as of December 31:
($ in millions)(a)
2024
2023
Net investment in direct financing leases:
Lease payment receivable (present value)
$
631
556
Unguaranteed residual assets (present value)
121
105
Net investment in sales-type leases:
Lease payment receivable (present value)
2,102
1,585
Unguaranteed residual assets (present value)
86
84
(a)
Excludes $248 and $249 of leveraged leases at December 31, 2024 and 2023, respectively.
Interest income recognized in the Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 was $40
million, $26 million and $29 million, respectively, for direct financing leases and $82 million, $63 million and $50 million, respectively, for
sales-type leases.
The following table presents undiscounted cash flows for both direct financing and sales-type portfolio leases for 2025 through 2029 and
thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:
As of December 31, 2024 ($ in millions)
Direct Financing
Leases
Sales-Type
Leases
2025
$
197
653
2026
169
508
2027
137
438
2028
76
313
2029
53
172
Thereafter
69
229
Total undiscounted cash flows
$
701
2,313
Less: Difference between undiscounted cash flows and discounted cash flows
70
211
Present value of lease payments (recognized as lease receivables)
$
631
2,102
The lease residual value represents the present value of the estimated fair value of the leased equipment at the end of the lease. The Bancorp
performs quarterly reviews of residual values associated with its leasing portfolio considering factors such as the subject equipment, structure
of the transaction, industry, prior experience with the lessee and other factors that impact the residual value to assess for impairment. The
Bancorp maintained an allowance of $16 million and $13 million at December 31, 2024 and 2023, respectively, to cover the losses that are
expected to be incurred over the remaining contractual terms of the related leases, including the potential losses related to the lease residual
value. Refer to Note 6 for additional information on credit quality and the ALLL.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
131 Fifth Third Bancorp
6. Credit Quality and the Allowance for Loan and Lease Losses
The Bancorp disaggregates ALLL balances and transactions in the ALLL by portfolio segment. Credit quality related disclosures for loans
and leases are further disaggregated by class.
Allowance for Loan and Lease Losses
The following tables summarize transactions in the ALLL by portfolio segment for the years ended December 31:
2024 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
Balance, beginning of period
$
1,130
145
1,047
2,322
Losses charged-off(a)
(267)
(2)
(417)
(686)
Recoveries of losses previously charged-off(a)
23
4
127
154
Provision for (benefit from) loan and lease losses
268
(1)
295
562
Balance, end of period
$
1,154
146
1,052
2,352
(a)
The Bancorp recorded $28 in both losses charged-off and recoveries of losses previously charged-off related to customer defaults on point-of-sale consumer loans
for which the Bancorp obtained recoveries under third-party credit enhancements.
2023 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
Balance, beginning of period
$
1,127
245
822
2,194
Impact of adoption of ASU 2022-02
4
(36)
(17)
(49)
Losses charged-off(a)
(170)
(4)
(348)
(522)
Recoveries of losses previously charged-off(a)
17
4
113
134
Provision for (benefit from) loan and lease losses
152
(64)
477
565
Balance, end of period
$
1,130
145
1,047
2,322
(a)
The Bancorp recorded $35 in both losses charged-off and recoveries of losses previously charged-off related to customer defaults on point-of-sale consumer loans
for which the Bancorp obtained recoveries under third-party credit enhancements.
2022 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
Balance, beginning of period
$
1,102
235
555
1,892
Losses charged-off(a)
(131)
(3)
(228)
(362)
Recoveries of losses previously charged-off(a)
30
5
100
135
Provision for loan and lease losses
126
8
395
529
Balance, end of period
$
1,127
245
822
2,194
(a)
The Bancorp recorded $32 in both losses charged-off and recoveries of losses previously charged-off related to customer defaults on point-of-sale consumer loans
for which the Bancorp obtained recoveries under third-party credit enhancements.
The following tables provide a summary of the ALLL and related loans and leases classified by portfolio segment:
As of December 31, 2024 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
ALLL:(a)
Individually evaluated
$
106
—
11
117
Collectively evaluated
1,048
146
1,041
2,235
Total ALLL
$
1,154
146
1,052
2,352
Portfolio loans and leases:(b)
Individually evaluated
$
395
131
96
622
Collectively evaluated
72,898
17,304
28,859
119,061
Total portfolio loans and leases
$
73,293
17,435
28,955
119,683
(a)
Includes $1 related to commercial leveraged leases at December 31, 2024.
(b)
Excludes $108 of residential mortgage loans measured at fair value and includes $248 of commercial leveraged leases, net of unearned income, at December 31,
2024.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
132 Fifth Third Bancorp
As of December 31, 2023 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
ALLL:(a)
Individually evaluated
$
90
—
6
96
Collectively evaluated
1,040
145
1,041
2,226
Total ALLL
$
1,130
145
1,047
2,322
Portfolio loans and leases:(b)
Individually evaluated
$
281
126
69
476
Collectively evaluated
72,465
16,784
27,393 116,642
Total portfolio loans and leases
$
72,746
16,910
27,462 117,118
(a)
Includes $2 related to commercial leveraged leases at December 31, 2023.
(b)
Excludes $116 of residential mortgage loans measured at fair value and includes $249 of commercial leveraged leases, net of unearned income, at December 31,
2023.
CREDIT RISK PROFILE
Commercial Portfolio Segment
For purposes of monitoring the credit quality and risk characteristics of its commercial portfolio segment, the Bancorp disaggregates the
segment into the following classes: commercial and industrial, commercial mortgage owner-occupied, commercial mortgage nonowner-
occupied, commercial construction and commercial leases.
To facilitate the monitoring of credit quality within the commercial portfolio segment, the Bancorp utilizes the following categories of credit
ratings: pass, special mention, substandard, doubtful and loss. The five categories, which are derived from standard regulatory rating
definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter.
Pass ratings, which are assigned to those borrowers that do not have identified potential or well-defined weaknesses and for which there is a
high likelihood of orderly repayment, are updated at least annually based on the size and credit characteristics of the borrower. All other
categories are updated on a quarterly basis during the month preceding the end of the calendar quarter.
The Bancorp assigns a special mention rating to loans and leases that have potential weaknesses that deserve management’s close attention. If
left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or
lease or the Bancorp’s credit position.
The Bancorp assigns a substandard rating to loans and leases that are inadequately protected by the current sound worth and paying capacity
of the borrower or of the collateral pledged. Substandard loans and leases have well-defined weaknesses or weaknesses that could jeopardize
the orderly repayment of the debt. Loans and leases with this rating also are characterized by the distinct possibility that the Bancorp will
sustain some loss if the deficiencies noted are not addressed and corrected.
The Bancorp assigns a doubtful rating to loans and leases that have all the attributes of a substandard rating with the added characteristic that
the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and
improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work
to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact
status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting
liens on additional collateral or refinancing plans.
Loans and leases classified as loss are considered uncollectible and are charged off in the period in which they are determined to be
uncollectible. Because loans and leases in this category are fully charged-off, they are not included in the following tables.
For loans and leases that are collectively evaluated for an ACL, the Bancorp utilizes models to forecast expected credit losses over a
reasonable and supportable forecast period based on the probability of a loan or lease defaulting, the expected balance at the estimated date of
default and the expected loss percentage given a default. For the commercial portfolio segment, the estimates for probability of default are
primarily based on internal ratings assigned to each commercial borrower on a 13-point scale and historical observations of how those ratings
migrate to a default over time in the context of macroeconomic conditions. For loans with available credit, the estimate of the expected
balance at the time of default considers expected utilization rates, which are primarily based on macroeconomic conditions and the utilization
history of similar borrowers under those economic conditions. The estimates for loss severity are primarily based on collateral type and
coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. For more information about the
Bancorp’s processes for developing these models, estimating credit losses for periods beyond the reasonable and supportable forecast period
and for estimating credit losses for individually evaluated loans, refer to Note 1.
The Bancorp defines term loans and leases as those having a fixed duration, repayment schedule and defined interest rate. For purposes of
disclosing term loans by origination year, the Bancorp generally determines the origination date for loans and leases within the commercial
portfolio as the date of the most recent credit decision or extension. Revolving and other loans include loans with revolving privileges
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
133 Fifth Third Bancorp
and certain complex lending arrangements involving commitments made by the Bancorp under predefined terms, including loans with both
revolving and non-revolving components, loans with delayed draw features or loans with interchangeable interest rate and repayment options
that extend beyond the time of origination.
The following tables present the amortized cost basis of the Bancorp’s commercial portfolio segment, by class and vintage, disaggregated by
credit risk rating:
As of December 31, 2024 ($ in millions)
Term Loans and Leases by Origination Year
Revolving
and Other
Loans
2024
2023
2022
2021
2020
Prior
Total
Commercial and industrial loans:
Pass
$ 2,966
1,346
2,445
1,321
371
437
40,185
49,071
Special mention
15
13
22
1
3
9
1,055
1,118
Substandard
67
95
182
74
32
15
1,545
2,010
Doubtful
—
—
2
—
—
—
70
72
Total commercial and industrial loans
$ 3,048
1,454
2,651
1,396
406
461
42,855
52,271
Commercial mortgage owner-occupied loans:
Pass
$
786
790
844
630
315
307
1,829
5,501
Special mention
8
9
23
7
—
3
31
81
Substandard
64
34
24
28
9
43
239
441
Doubtful
—
—
—
—
—
—
—
—
Total commercial mortgage owner-occupied loans
$
858
833
891
665
324
353
2,099
6,023
Commercial mortgage nonowner-occupied loans:
Pass
$
710
751
769
170
263
408
2,698
5,769
Special mention
54
—
50
5
—
—
150
259
Substandard
38
27
9
—
—
2
119
195
Doubtful
—
—
—
—
—
—
—
—
Total commercial mortgage nonowner-occupied loans
$
802
778
828
175
263
410
2,967
6,223
Commercial construction loans:
Pass
$
4
21
—
29
—
—
4,565
4,619
Special mention
—
—
—
—
—
—
756
756
Substandard
—
—
—
—
—
—
213
213
Doubtful
—
—
—
—
—
—
—
—
Total commercial construction loans
$
4
21
—
29
—
—
5,534
5,588
Commercial leases:
Pass
$ 1,532
335
281
311
137
517
—
3,113
Special mention
4
4
2
3
2
4
—
19
Substandard
—
11
12
4
3
26
—
56
Doubtful
—
—
—
—
—
—
—
—
Total commercial leases
$ 1,536
350
295
318
142
547
—
3,188
Total commercial loans and leases:
Pass
$ 5,998
3,243
4,339
2,461
1,086
1,669
49,277
68,073
Special mention
81
26
97
16
5
16
1,992
2,233
Substandard
169
167
227
106
44
86
2,116
2,915
Doubtful
—
—
2
—
—
—
70
72
Total commercial loans and leases
$ 6,248
3,436
4,665
2,583
1,135
1,771
53,455
73,293
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
134 Fifth Third Bancorp
As of December 31, 2023 ($ in millions)
Term Loans and Leases by Origination Year
Revolving
and Other
Loans
2023
2022
2021
2020
2019
Prior
Total
Commercial and industrial loans:
Pass
$ 2,124
3,434
1,814
580
263
321
40,889
49,425
Special mention
16
100
60
33
6
105
1,756
2,076
Substandard
105
103
28
18
39
73
1,397
1,763
Doubtful
—
—
—
—
—
—
6
6
Total commercial and industrial loans
$ 2,245
3,637
1,902
631
308
499
44,048
53,270
Commercial mortgage owner-occupied loans:
Pass
$
870
1,078
746
408
219
260
1,279
4,860
Special mention
30
23
18
—
6
—
20
97
Substandard
31
22
11
10
45
10
114
243
Doubtful
—
—
—
—
—
—
—
—
Total commercial mortgage owner-occupied loans
$
931
1,123
775
418
270
270
1,413
5,200
Commercial mortgage nonowner-occupied loans:
Pass
$
886
825
261
348
293
243
2,724
5,580
Special mention
111
166
—
2
—
2
81
362
Substandard
81
1
8
—
—
2
42
134
Doubtful
—
—
—
—
—
—
—
—
Total commercial mortgage nonowner-occupied loans
$ 1,078
992
269
350
293
247
2,847
6,076
Commercial construction loans:
Pass
$
171
36
45
41
70
6
4,818
5,187
Special mention
—
—
—
—
—
—
199
199
Substandard
61
—
33
—
—
—
141
235
Doubtful
—
—
—
—
—
—
—
—
Total commercial construction loans
$
232
36
78
41
70
6
5,158
5,621
Commercial leases:
Pass
$
598
386
462
202
145
664
—
2,457
Special mention
1
9
12
3
8
14
—
47
Substandard
20
14
1
5
5
30
—
75
Doubtful
—
—
—
—
—
—
—
—
Total commercial leases
$
619
409
475
210
158
708
—
2,579
Total commercial loans and leases:
Pass
$ 4,649
5,759
3,328
1,579
990
1,494
49,710
67,509
Special mention
158
298
90
38
20
121
2,056
2,781
Substandard
298
140
81
33
89
115
1,694
2,450
Doubtful
—
—
—
—
—
—
6
6
Total commercial loans and leases
$ 5,105
6,197
3,499
1,650
1,099
1,730
53,466
72,746
The following tables summarize the Bancorp’s gross charge-offs within the commercial portfolio segment, by class and vintage during the
years ended December 31:
2024 ($ in millions)
Term Loans and Leases by Origination Year
Revolving
and Other
Loans
2024
2023
2022
2021
2020
Prior
Total
Commercial loans and leases:
Commercial and industrial loans
$
1
6
17
1
1
—
238
264
Commercial mortgage owner-occupied loans
—
1
—
—
—
—
—
1
Commercial construction loans
—
—
—
—
—
—
—
—
Commercial leases
—
—
—
—
—
2
—
2
Total commercial loans and leases
$
1
7
17
1
1
2
238
267
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
135 Fifth Third Bancorp
2023 ($ in millions)
Term Loans and Leases by Origination Year
Revolving
and Other
Loans
2023
2022
2021
2020
2019
Prior
Total
Commercial loans and leases:
Commercial and industrial loans
$
25
7
12
1
—
11
112
168
Commercial mortgage owner-occupied loans
—
—
—
—
—
—
1
1
Commercial construction loans
—
—
—
—
—
—
1
1
Commercial leases
—
—
—
—
—
—
—
—
Total commercial loans and leases
$
25
7
12
1
—
11
114
170
Age Analysis of Past Due Commercial Loans and Leases
The following tables summarize the Bancorp’s amortized cost basis in portfolio commercial loans and leases, by age and class:
Current
Loans and
Leases(a)
Past Due
Total Loans
and Leases
90 Days Past
Due and Still
Accruing
As of December 31, 2024 ($ in millions)
30-89
Days(a)
90 Days
or More(a)
Total
Past Due
Commercial loans and leases:
Commercial and industrial loans
$
52,098
90
83
173
52,271
5
Commercial mortgage owner-occupied loans
5,980
40
3
43
6,023
—
Commercial mortgage nonowner-occupied loans
6,215
6
2
8
6,223
—
Commercial construction loans
5,587
1
—
1
5,588
—
Commercial leases
3,167
18
3
21
3,188
1
Total portfolio commercial loans and leases
$
73,047
155
91
246
73,293
6
(a)
Includes accrual and nonaccrual loans and leases.
Current
Loans and
Leases(a)
Past Due
Total Loans
and Leases
90 Days Past
Due and Still
Accruing
As of December 31, 2023 ($ in millions)
30-89
Days(a)
90 Days
or More(a)
Total
Past Due
Commercial loans and leases:
Commercial and industrial loans
$
53,107
61
102
163
53,270
8
Commercial mortgage owner-occupied loans
5,196
1
3
4
5,200
—
Commercial mortgage nonowner-occupied loans
6,061
14
1
15
6,076
—
Commercial construction loans
5,621
—
—
—
5,621
—
Commercial leases
2,562
17
—
17
2,579
—
Total portfolio commercial loans and leases
$
72,547
93
106
199
72,746
8
(a)
Includes accrual and nonaccrual loans and leases.
Residential Mortgage and Consumer Portfolio Segments
For purposes of monitoring the credit quality and risk characteristics of its consumer portfolio segment, the Bancorp disaggregates the
segment into the following classes: home equity, indirect secured consumer loans, credit card, solar energy installation loans and other
consumer loans. The Bancorp’s residential mortgage portfolio segment is also a separate class.
The Bancorp considers repayment performance as the best indicator of credit quality for residential mortgage and consumer loans, which
includes both the delinquency status and performing versus nonperforming status of the loans. The delinquency status of all residential
mortgage and consumer loans and the performing versus nonperforming status are presented in the following tables.
For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models
primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the
probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those
characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also especially impactful in
the expected credit loss models for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity)
and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected
balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on
macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. Refer to Note 1 for additional
information about the Bancorp’s process for developing these models and its process for estimating credit losses for periods beyond the
reasonable and supportable forecast period.
The following tables present the amortized cost basis of the Bancorp’s residential mortgage and consumer portfolio segments, by class and
vintage, disaggregated by both age and performing versus nonperforming status:
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
136 Fifth Third Bancorp
As of December 31, 2024 ($ in millions)
Term Loans by Origination Year
Revolving
Loans
Revolving
Loans
Converted to
Term Loans
2024
2023
2022
2021
2020
Prior
Total
Residential mortgage loans:
Performing:
Current(a)
$ 1,961
998 2,961 4,606 2,491 4,245
—
—
17,262
30-89 days past due
1
3
4
9
4
12
—
—
33
90 days or more past due
1
—
1
1
—
2
—
—
5
Nonperforming
—
2
9
13
8
103
—
—
135
Total residential mortgage loans(b)
$ 1,963 1,003 2,975 4,629 2,503 4,362
—
—
17,435
Home equity:
Performing:
Current
$
168
67
34
2
4
86
3,660
72
4,093
30-89 days past due
—
—
—
—
—
1
23
1
25
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
—
—
1
—
—
7
56
6
70
Total home equity
$
168
67
35
2
4
94
3,739
79
4,188
Indirect secured consumer loans:
Performing:
Current
$ 6,773 2,836 3,046 2,371
753
349
—
—
16,128
30-89 days past due
19
27
39
27
11
7
—
—
130
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
4
10
19
13
5
4
—
—
55
Total indirect secured consumer loans
$ 6,796 2,873 3,104 2,411
769
360
—
—
16,313
Credit card:
Performing:
Current
$
—
—
—
—
—
—
1,664
—
1,664
30-89 days past due
—
—
—
—
—
—
18
—
18
90 days or more past due
—
—
—
—
—
—
20
—
20
Nonperforming
—
—
—
—
—
—
32
—
32
Total credit card
$
—
—
—
—
—
—
1,734
—
1,734
Solar energy installation loans:
Performing:
Current
$
894 2,095 1,094
2
—
33
—
—
4,118
30-89 days past due
2
11
7
—
—
—
—
—
20
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
1
34
28
—
—
1
—
—
64
Total solar energy installation loans
$
897 2,140 1,129
2
—
34
—
—
4,202
Other consumer loans:
Performing:
Current
$
201
351
507
219
171
142
860
34
2,485
30-89 days past due
1
5
10
3
1
2
1
1
24
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
—
2
4
1
—
1
—
1
9
Total other consumer loans
$
202
358
521
223
172
145
861
36
2,518
Total residential mortgage and consumer loans:
Performing:
Current
$ 9,997 6,347 7,642 7,200 3,419 4,855
6,184
106
45,750
30-89 days past due
23
46
60
39
16
22
42
2
250
90 days or more past due
1
—
1
1
—
2
20
—
25
Nonperforming
5
48
61
27
13
116
88
7
365
Total residential mortgage and consumer loans(b)
$ 10,026 6,441 7,764 7,267 3,448 4,995
6,334
115
46,390
(a)
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the
VA. As of December 31, 2024, $90 of these loans were 30-89 days past due and $162 were 90 days or more past due. The Bancorp recognized $1 of losses during
the year ended December 31, 2024 due to claim denials and curtailments associated with these insured or guaranteed loans.
(b)
Excludes $108 of residential mortgage loans measured at fair value at December 31, 2024, including $1 of 30-89 days past due loans, $1 of 90 days or more past
due loans and $2 of nonperforming loans.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
137 Fifth Third Bancorp
As of December 31, 2023 ($ in millions)
Term Loans by Origination Year
Revolving
Loans
Revolving
Loans
Converted to
Term Loans
2023
2022
2021
2020
2019
Prior
Total
Residential mortgage loans:
Performing:
Current(a)
$
995 3,139 5,001 2,703
943 3,971
—
—
16,752
30-89 days past due
—
3
6
5
1
14
—
—
29
90 days or more past due
—
1
1
1
1
3
—
—
7
Nonperforming
—
6
6
5
4
101
—
—
122
Total residential mortgage loans(b)
$
995 3,149 5,014 2,714
949 4,089
—
—
16,910
Home equity:
Performing:
Current
$
84
41
2
6
11
92
3,549
46
3,831
30-89 days past due
—
—
—
—
—
2
25
1
28
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
—
—
—
—
—
6
50
1
57
Total home equity
$
84
41
2
6
11
100
3,624
48
3,916
Indirect secured consumer loans:
Performing:
Current
$ 4,126 4,333 3,925 1,527
597
271
—
—
14,779
30-89 days past due
22
49
40
19
12
8
—
—
150
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
4
11
9
6
3
3
—
—
36
Total indirect secured consumer loans
$ 4,152 4,393 3,974 1,552
612
282
—
—
14,965
Credit card:
Performing:
Current
$
—
—
—
—
—
—
1,789
—
1,789
30-89 days past due
—
—
—
—
—
—
21
—
21
90 days or more past due
—
—
—
—
—
—
21
—
21
Nonperforming
—
—
—
—
—
—
34
—
34
Total credit card
$
—
—
—
—
—
—
1,865
—
1,865
Solar energy installation loans:
Performing:
Current
$ 2,415 1,192
2
—
—
41
—
—
3,650
30-89 days past due
12
6
—
—
—
—
—
—
18
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
29
30
—
—
—
1
—
—
60
Total solar energy installation loans
$ 2,456 1,228
2
—
—
42
—
—
3,728
Other consumer loans:
Performing:
Current
$
511
703
328
246
101
154
859
41
2,943
30-89 days past due
5
15
4
2
2
2
2
1
33
90 days or more past due
—
—
—
—
—
—
—
—
—
Nonperforming
2
6
1
1
1
—
—
1
12
Total other consumer loans
$
518
724
333
249
104
156
861
43
2,988
Total residential mortgage and consumer loans:
Performing:
Current
$ 8,131 9,408 9,258 4,482 1,652 4,529
6,197
87
43,744
30-89 days past due
39
73
50
26
15
26
48
2
279
90 days or more past due
—
1
1
1
1
3
21
—
28
Nonperforming
35
53
16
12
8
111
84
2
321
Total residential mortgage and consumer loans(b)
$ 8,205 9,535 9,325 4,521 1,676 4,669
6,350
91
44,372
(a)
Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the
VA. As of December 31, 2023, $79 of these loans were 30-89 days past due and $141 were 90 days or more past due. The Bancorp recognized $2 of losses during
the year ended December 31, 2023 due to claim denials and curtailments associated with these insured or guaranteed loans.
(b)
Excludes $116 of residential mortgage loans measured at fair value at December 31, 2023, including $1 of 30-89 days past due loans and $2 of nonperforming
loans.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
138 Fifth Third Bancorp
The following tables summarize the Bancorp’s gross charge-offs within the residential mortgage and consumer portfolio segments, by class
and vintage during the years ended December 31:
2024 ($ in millions)
Term Loans by Origination Year
Revolving
Loans
Revolving Loans
Converted to
Term Loans
2024
2023
2022
2021
2020
Prior
Total
Residential mortgage loans
$
—
—
—
—
—
2
—
—
2
Consumer loans:
Home equity
—
—
—
—
—
1
5
—
6
Indirect secured consumer loans
7
35
53
25
9
10
—
— 139
Credit card
—
—
—
—
—
—
87
—
87
Solar energy installation loans
2
16
13
—
14
18
—
—
63
Other consumer loans
1
12
24
12
20
16
34
3 122
Total residential mortgage and consumer loans
$
10
63
90
37
43
47
126
3 419
2023 ($ in millions)
Term Loans by Origination Year
Revolving
Loans
Revolving Loans
Converted to
Term Loans
2023
2022
2021
2020
2019
Prior
Total
Residential mortgage loans
$
—
—
—
—
—
4
—
—
4
Consumer loans:
Home equity
—
—
—
—
—
1
7
—
8
Indirect secured consumer loans
9
42
27
14
10
8
—
— 110
Credit card
—
—
—
—
—
—
82
—
82
Solar energy installation loans
8
16
1
—
—
2
—
—
27
Other consumer loans
7
37
14
12
7
8
34
2 121
Total residential mortgage and consumer loans
$
24
95
42
26
17
23
123
2 352
Collateral-Dependent Loans and Leases
The Bancorp considers a loan or lease to be collateral-dependent when the borrower is experiencing financial difficulty and repayment is
expected to be provided substantially through the operation or sale of the collateral. When a loan or lease is collateral-dependent, its fair value
is generally based on the fair value less cost to sell of the underlying collateral.
The following table presents the amortized cost basis of the Bancorp’s collateral-dependent loans and leases, by portfolio class, as of:
($ in millions)
December 31,
2024
December 31,
2023
Commercial loans and leases:
Commercial and industrial loans
$
325
268
Commercial mortgage owner-occupied loans
63
8
Commercial mortgage nonowner-occupied loans
4
2
Commercial construction loans
1
1
Commercial leases
2
—
Total commercial loans and leases
$
395
279
Residential mortgage loans
131
126
Consumer loans:
Home equity
66
54
Indirect secured consumer loans
30
15
Total consumer loans
$
96
69
Total portfolio loans and leases
$
622
474
Nonperforming Assets
Nonperforming assets include nonaccrual loans and leases for which ultimate collectability of the full amount of the principal and/or interest
is uncertain and certain other assets, including OREO and other repossessed property.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
139 Fifth Third Bancorp
The following table presents the amortized cost basis of the Bancorp’s nonaccrual loans and leases, by class, and OREO and other
repossessed property, as of:
December 31, 2024
December 31, 2023
($ in millions)
With an
ALLL
No Related
ALLL
Total
With an
ALLL
No Related
ALLL
Total
Commercial loans and leases:
Commercial and industrial loans
$
265
109
374
273
31
304
Commercial mortgage owner-occupied loans
52
23
75
11
6
17
Commercial mortgage nonowner-occupied loans
—
4
4
—
3
3
Commercial construction loans
—
1
1
—
1
1
Commercial leases
2
—
2
—
1
1
Total nonaccrual portfolio commercial loans and leases
$
319
137
456
284
42
326
Residential mortgage loans
57
80
137
26
98
124
Consumer loans:
Home equity
21
49
70
21
36
57
Indirect secured consumer loans
48
7
55
32
4
36
Credit card
32
—
32
34
—
34
Solar energy installation loans
64
—
64
60
—
60
Other consumer loans
9
—
9
12
—
12
Total nonaccrual portfolio consumer loans
$
174
56
230
159
40
199
Total nonaccrual portfolio loans and leases(a)(b)
$
550
273
823
469
180
649
OREO and other repossessed property
—
30
30
—
39
39
Total nonperforming portfolio assets(a)(b)
$
550
303
853
469
219
688
(a)
Excludes $7 and $1 of nonaccrual loans held for sale as of December 31, 2024 and 2023, respectively.
(b)
Includes $18 and $19 of nonaccrual government-insured commercial loans whose repayments are insured by the SBA as of December 31, 2024 and 2023,
respectively.
The Bancorp recognized an immaterial amount of interest income on nonaccrual loans and leases for both the years ended December 31,
2024 and 2023.
The Bancorp’s amortized cost basis of consumer mortgage loans secured by residential real estate properties for which formal foreclosure
proceedings are in process according to local requirements of the applicable jurisdiction was $94 million and $107 million as of
December 31, 2024 and 2023, respectively.
Modifications to Borrowers Experiencing Financial Difficulty
In the course of servicing its loans, the Bancorp works with borrowers who are experiencing financial difficulty to identify solutions that are
mutually beneficial to both parties with the objective of mitigating the risk of losses on the loan. These efforts often result in modifications to
the payment terms of the loan. The types of modifications offered to borrowers vary by type of loan and may include term extensions, interest
rate reductions, payment delays (other than those that are insignificant) or combinations thereof. The Bancorp typically does not provide
principal forgiveness except in circumstances where the loan has already been fully or partially charged off.
The Bancorp applies its expected credit loss models consistently to both modified and non-modified loans when estimating the ALLL. For
loans which are modified for borrowers experiencing financial difficulty, there is generally not a significant change to the ALLL upon
modification because the Bancorp’s ALLL estimation methodologies already consider those borrowers’ financial difficulties and the resulting
effects of potential modifications when estimating expected credit losses.
Portfolio loans with an amortized cost basis of $552 million and $615 million were modified during the years ended December 31, 2024 and
2023, respectively, for borrowers experiencing financial difficulty, as further discussed in the following sections. These modifications for the
years ended December 31, 2024 and 2023 represented 0.46% and 0.52%, respectively, of total portfolio loans and leases as of December 31,
2024 and 2023. These amounts excluded $52 million and $29 million for the years ended December 31, 2024 and 2023, respectively, of
consumer and residential mortgage loans which have been granted a concession under provisions of the Federal Bankruptcy Act and are
monitored separately from loans modified under the Bancorp’s loan modification programs. As of December 31, 2024 and 2023, the Bancorp
had commitments of $88 million and $130 million, respectively, to lend additional funds to borrowers experiencing financial difficulty whose
terms have been modified during the years ended December 31, 2024 and 2023, respectively.
Commercial portfolio segment
Commercial loan modifications are individually negotiated and may vary depending on the borrower’s financial situation, but the Bancorp
most commonly utilizes term extensions for periods of three to twelve months. In less common situations and when specifically warranted by
the borrower’s situation, the Bancorp may also consider offering commercial borrowers interest rate reductions or payment delays, which
may be combined with a term extension.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
140 Fifth Third Bancorp
The following tables present the amortized cost basis as of December 31, 2024 and 2023, respectively, of the Bancorp’s commercial portfolio
loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification, during the years ended:
December 31, 2024 ($ in millions)
Term
Extension
Term Extension
and Payment
Delay
Payment
Delay
Other
Total
% of Total
Class
Commercial and industrial loans
$
155
19
57
1
232
0.44 %
Commercial mortgage owner-occupied loans
46
14
1
—
61
1.01
Commercial mortgage nonowner-occupied loans
72
—
—
—
72
1.16
Commercial construction loans
58
—
—
1
59
1.06
Total commercial portfolio loans
$
331
33
58
2
424
0.60 %
December 31, 2023 ($ in millions)
Term
Extension
Term Extension
and Payment
Delay
Payment
Delay
Other
Total
% of Total
Class
Commercial and industrial loans
$
155
31
56
3
245
0.46 %
Commercial mortgage owner-occupied loans
27
—
—
—
27
0.52
Commercial mortgage nonowner-occupied loans
66
—
—
2
68
1.12
Commercial construction loans
113
—
—
—
113
2.01
Total commercial portfolio loans
$
361
31
56
5
453
0.62 %
Residential mortgage portfolio segment
The Bancorp has established residential mortgage loan modification programs which define the type of modifications available as well as the
eligibility criteria for borrowers. The designs of the Bancorp’s modification programs for residential mortgage loans are similar to those
utilized by the various GSEs. The most common modification program utilized for residential mortgage loans is a term extension for up to
480 months from the modification date, combined with a change in interest rate to a fixed rate (which may be an increase or decrease from
the rate in the original loan). As part of these modifications, the Bancorp may capitalize delinquent amounts due at the time of the
modification into the principal balance of the loan when determining its modified payment structure. For loans where the modification results
in a new monthly payment amount, borrowers may be required to complete a trial period of three to four months before the loan is
permanently modified. The Bancorp also offers payment delay modifications to qualified borrowers which allow either the delay of
repayment for delinquent amounts due until maturity or capitalization of delinquent amounts due into the principal balance of the loan. The
number of monthly payments delayed varies by borrower but is most commonly within a range of six to twelve months.
The following table presents the amortized cost basis as of December 31, 2024 and 2023 of the Bancorp’s residential mortgage portfolio
loans that were modified for borrowers experiencing financial difficulty, by type of modification, during the years ended:
December 31, 2024
December 31, 2023
($ in millions)
Total
% of Total
Class
Total
% of Total
Class
Payment delay
$
5
0.03 % $
18
0.11 %
Term extension and payment delay
72
0.41
91
0.53
Term extension, interest rate reduction and payment delay
12
0.07
4
0.02
Total residential mortgage portfolio loans
$
89
0.51 % $
113
0.66 %
The Bancorp had $5 million and $3 million of in-process modifications to residential mortgage loans outstanding as of December 31, 2024
and 2023, respectively, which are excluded from the completed modification activity in the tables above. These in-process modifications will
be reported as completed modifications once the borrower satisfies the applicable contingencies in the modification agreement and the loan is
contractually modified to make the modified terms permanent.
Consumer portfolio segment
The Bancorp’s modification programs for consumer loans vary based on type of loan. The most common modification program for home
equity is a term extension for up to 360 months combined with a delay in repayment of delinquent amounts due until maturity, which is
typically combined with an interest rate reduction. Modification programs for credit card typically involve an interest rate reduction and an
increase to the minimum monthly payment in order to repay a larger portion of outstanding balances. Modifications for indirect secured
consumer loans, solar energy installation loans and other consumer loans are less commonly utilized as part of the Bancorp’s loss mitigation
activities and programs vary by specific product type.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
141 Fifth Third Bancorp
The following tables present the amortized cost basis as of December 31, 2024 and 2023, respectively, of the Bancorp’s consumer portfolio
loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification, during the years ended:
December 31, 2024 ($ in millions)
Interest
Rate
Reduction
Payment
Delay
Interest Rate
Reduction
and Payment
Delay
Term
Extension
and Payment
Delay
Term Extension,
Interest Rate
Reduction and
Payment Delay
Total
% of Total
Class
Home equity
$
4
—
—
2
9
15
0.36 %
Credit card
20
—
—
—
—
20
1.15
Solar energy installation loans
—
1
—
—
—
1
0.02
Other consumer loans
—
3
—
—
—
3
0.12
Total consumer portfolio loans
$
24
4
—
2
9
39
0.13 %
December 31, 2023 ($ in millions)
Interest
Rate
Reduction
Payment
Delay
Interest Rate
Reduction
and Payment
Delay
Term
Extension
and Payment
Delay
Term Extension,
Interest Rate
Reduction and
Payment Delay
Total
% of Total
Class
Home equity
$
4
1
1
2
8
16
0.41 %
Credit card
27
—
—
—
—
27
1.45
Solar energy installation loans
—
1
—
—
—
1
0.03
Other consumer loans
—
5
—
—
—
5
0.17
Total consumer portfolio loans
$
31
7
1
2
8
49
0.18 %
Financial effects of loan modifications
The following table presents the financial effects of the Bancorp’s significant types of portfolio loan modifications to borrowers experiencing
financial difficulty, by portfolio class for the years ended December 31:
Financial Effects
2024
2023
Commercial loans:
Commercial and industrial loans
Weighted-average length of term extensions
9 months
11 months
Weighted-average length of payment delay
15 months
23 months
Commercial mortgage owner-
occupied loans
Weighted-average length of term extensions
10 months
15 months
Weighted-average length of payment delay
15 months
N/A
Commercial mortgage nonowner-
occupied loans
Weighted-average length of term extensions
20 months
16 months
Commercial construction loans
Weighted-average length of term extensions
12 months
12 months
Residential mortgage loans
Weighted-average length of term extensions
10.4 years
12.9 years
Approximate amount of payment delays as a percentage of
the related loan balances
13%
17%
Consumer loans:
Home equity
Weighted-average length of term extensions
22.8 years
24.2 years
Weighted-average interest rate reduction
From 9.2% to 7.2%
From 8.7% to 7.0%
Approximate amount of payment delays as a percentage of
the related loan balances
5%
5%
Credit card
Weighted-average interest rate reduction
From 23.9% to 4.1%
From 23.7% to 3.9%
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
142 Fifth Third Bancorp
Credit quality of modified loans
The Bancorp closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the
effectiveness of its modification efforts.
The following tables present the amortized cost basis as of December 31, 2024 and 2023, respectively, for the Bancorp’s portfolio loans that
were modified during the years ended December 31, 2024 and 2023, respectively, for borrowers experiencing financial difficulty, by age and
portfolio class:
December 31, 2024 ($ in millions)
Past Due
Current
30-89 Days
90 Days or More
Total
Commercial loans:
Commercial and industrial loans
$
182
22
28
232
Commercial mortgage owner-occupied loans
61
—
—
61
Commercial mortgage nonowner-occupied loans
72
—
—
72
Commercial construction loans
59
—
—
59
Residential mortgage loans
56
15
18
89
Consumer loans:
Home equity
13
1
1
15
Credit card(a)
15
3
2
20
Solar energy installation loans
1
—
—
1
Other consumer loans
3
—
—
3
Total portfolio loans
$
462
41
49
552
(a)
Credit card loans continue to be reported as delinquent after modification as they are not returned to current status until the borrower demonstrates a willingness
and ability to repay the loan according to its modified terms.
December 31, 2023 ($ in millions)
Past Due
Current
30-89 Days
90 Days or More
Total
Commercial loans:
Commercial and industrial loans
$
184
9
52
245
Commercial mortgage owner-occupied loans
26
—
1
27
Commercial mortgage nonowner-occupied loans
68
—
—
68
Commercial construction loans
113
—
—
113
Residential mortgage loans
86
15
12
113
Consumer loans:
Home equity
14
2
—
16
Credit card(a)
19
5
3
27
Solar energy installation loans
1
—
—
1
Other consumer loans
5
—
—
5
Total portfolio loans
$
516
31
68
615
(a)
Credit card loans continue to be reported as delinquent after modification as they are not returned to current status until the borrower demonstrates a willingness
and ability to repay the loan according to its modified terms.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
143 Fifth Third Bancorp
The Bancorp considers modifications to borrowers experiencing financial difficulty that subsequently become 90 days or more past due under
the modified terms as subsequently defaulted. The following tables present the amortized cost basis as of December 31, 2024 and 2023,
respectively, of the modifications for borrowers experiencing financial difficulty that subsequently defaulted during the years ended
December 31, 2024 and 2023, respectively, and were within twelve months of the modification date:
December 31, 2024
($ in millions)
Term
Extension
Interest
Rate
Reduction
Payment
Delay
Term Extension
and Interest
Rate Reduction
Term Extension
and Payment
Delay
Term Extension,
Interest Rate
Reduction and
Payment Delay
Total
Commercial loans:
Commercial and industrial loans
$
14
—
13
1
8
—
36
Commercial mortgage owner-
occupied loans
—
—
—
—
—
—
—
Residential mortgage loans
—
—
3
—
29
6
38
Consumer loans:
Home equity
—
1
—
—
1
1
3
Credit card
—
9
—
—
—
—
9
Total portfolio loans
$
14
10
16
1
38
7
86
December 31, 2023
($ in millions)(a)
Term
Extension
Interest
Rate
Reduction
Payment
Delay
Term Extension
and Interest
Rate Reduction
Term Extension
and Payment
Delay
Term Extension,
Interest Rate
Reduction and
Payment Delay
Total
Commercial loans:
Commercial and industrial loans
$
51
—
—
—
—
—
51
Commercial mortgage owner-
occupied loans
1
—
—
—
—
—
1
Residential mortgage loans
—
—
2
—
11
1
14
Consumer loans:
Home equity
—
1
—
—
—
—
1
Credit card
—
10
—
—
—
—
10
Total portfolio loans
$
52
11
2
—
11
1
77
(a)
Excludes loans modified prior to the adoption of ASU 2022-02.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
144 Fifth Third Bancorp
7. Bank Premises and Equipment
The following table provides a summary of bank premises and equipment as of December 31:
($ in millions)
Estimated
Useful Life
2024
2023
Equipment
1 - 20 years
$
2,769
2,578
Buildings(a)
1 - 30 years
1,784
1,742
Leasehold improvements
1 - 30 years
760
685
Land and improvements(a)
623
618
Construction in progress(a)
199
180
Bank premises and equipment held for sale:(b)
Land and improvements
10
15
Buildings
4
4
Accumulated depreciation and amortization
(3,674)
(3,473)
Total bank premises and equipment
$
2,475
2,349
(a)
At December 31, 2024 and 2023, land and improvements, buildings and construction in progress included $1 and $9, respectively, associated with parcels of
undeveloped land intended for future branch expansion.
(b)
Included within the assets of General Corporate & Other in the Bancorp’s segment reporting.
Depreciation and amortization expense related to bank premises and equipment, including amortization of finance lease ROU assets, was
$306 million, $292 million and $273 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The Bancorp monitors changing customer preferences associated with the channels it uses for banking transactions to evaluate the efficiency,
competitiveness and quality of the customer service experience in its consumer distribution network. As part of this ongoing assessment, the
Bancorp may determine that it is no longer fully committed to maintaining full-service banking centers at certain locations. Similarly, the
Bancorp may also determine that it is no longer fully committed to building banking centers on certain parcels of land which had previously
been held for future branch expansion. The Bancorp closed a total of 32 banking centers throughout its footprint during the year ended
December 31, 2024.
The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their
carrying values may not be recoverable. Impairment losses associated with such assessments and lower of cost or market adjustments were
$1 million, $2 million and $9 million for the years ended December 31, 2024, 2023 and 2022, respectively. For the year ended December 31,
2023, the Bancorp also recognized $8 million of impairment losses in conjunction with transferring certain parcels of land to OREO. The
recognized impairment losses were recorded in other noninterest income in the Consolidated Statements of Income.
8. Operating Lease Equipment
Operating lease equipment was $319 million and $459 million at December 31, 2024 and 2023, respectively, net of accumulated depreciation
of $333 million and $355 million at December 31, 2024 and 2023, respectively. The Bancorp recorded lease income of $100 million, $135
million and $146 million relating to lease payments for operating leases in commercial banking revenue in the Consolidated Statements of
Income for the years ended December 31, 2024, 2023 and 2022, respectively. Depreciation expense related to operating lease equipment is
reported as a component of other noninterest expense in the Consolidated Statements of Income and was $81 million, $110 million and
$121 million for the years ended December 31, 2024, 2023 and 2022, respectively. The Bancorp received payments of $101 million,
$140 million and $147 million related to operating leases during the years ended December 31, 2024, 2023 and 2022, respectively.
The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their
carrying values may not be recoverable. As a result of these recoverability assessments, the Bancorp recognized impairment losses associated
with operating lease assets of an immaterial amount for the years ended December 31, 2024 and 2023 and $2 million for the year ended
December 31, 2022. The recognized impairment losses were recorded in commercial banking revenue in the Consolidated Statements of
Income.
The following table presents future lease payments receivable from operating leases for 2025 through 2029 and thereafter:
As of December 31, 2024 ($ in millions)
Undiscounted
Cash Flows
2025
$
73
2026
47
2027
25
2028
11
2029
6
Thereafter
9
Total operating lease payments
$
171
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
145 Fifth Third Bancorp
9. Lease Obligations - Lessee
The Bancorp leases certain banking centers, ATM sites, land for owned buildings and equipment. The Bancorp’s lease agreements typically
do not contain any residual value guarantees or any material restrictive covenants.
The following table provides a summary of lease assets and lease liabilities as of December 31:
($ in millions)
Consolidated Balance Sheets Caption
2024
2023
Assets
Operating lease ROU assets
Other assets
$
526
511
Finance lease ROU assets
Bank premises and equipment
146
126
Total ROU assets(a)
$
672
637
Liabilities
Operating lease liabilities
Accrued taxes, interest and expenses
$
606
601
Finance lease liabilities
Long-term debt
161
134
Total lease liabilities
$
767
735
(a)
Operating and finance lease ROU assets are recorded net of accumulated amortization of $328 and $54, respectively, as of December 31, 2024, and $292 and
$77, respectively, as of December 31, 2023.
The following table presents the components of lease costs for the years ended December 31:
($ in millions)
Consolidated Statements of Income Caption
2024
2023
2022
Lease costs:
Amortization of ROU assets
Net occupancy and equipment expense
$
21
19
19
Interest on lease liabilities
Interest on long-term debt
6
5
5
Total finance lease costs
$
27
24
24
Operating lease cost
Net occupancy expense
$
89
87
84
Short-term lease cost
Net occupancy expense
1
2
1
Variable lease cost
Net occupancy expense
30
29
28
Sublease income
Net occupancy expense
(3)
(2)
(3)
Total operating lease costs
$
117
116
110
Total lease costs
$
144
140
134
The Bancorp performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values
may not be recoverable. In addition to the lease costs disclosed in the table above, the Bancorp recognized $1 million, $2 million and
$2 million of impairment losses and termination charges for the ROU assets related to certain operating leases for the years ended
December 31, 2024, 2023 and 2022, respectively. The recognized losses were recorded in net occupancy expense in the Consolidated
Statements of Income.
The following table presents undiscounted cash flows for both operating leases and finance leases for 2025 through 2029 and thereafter as
well as a reconciliation of the undiscounted cash flows to the total lease liabilities:
As of December 31, 2024 ($ in millions)
Operating
Leases
Finance
Leases
Total
2025
$
92
22
114
2026
86
22
108
2027
78
21
99
2028
70
21
91
2029
60
11
71
Thereafter
397
104
501
Total undiscounted cash flows
$
783
201
984
Less: Difference between undiscounted cash flows and discounted cash flows
177
40
217
Present value of lease liabilities
$
606
161
767
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
146 Fifth Third Bancorp
The following table presents the weighted-average remaining lease term and weighted-average discount rate as of December 31:
2024
2023
Weighted-average remaining lease term (years):
Operating leases
11.57
11.07
Finance leases
12.66
15.21
Weighted-average discount rate:
Operating leases
4.08 %
3.72
Finance leases
3.80
3.02
The following table presents information related to lease transactions for the years ended December 31:
($ in millions)
2024
2023
2022
Cash paid for amounts included in the measurement of lease liabilities:(a)
Operating cash flows from operating leases
$
95
91
90
Operating cash flows from finance leases
6
5
5
Financing cash flows from finance leases
18
16
23
Gains on sale-leaseback transactions
—
2
4
(a)
The cash flows related to short-term and variable lease payments are not included in the amounts presented as they were not included in the measurement of lease
liabilities.
10. Goodwill
Business combinations entered into by the Bancorp typically result in the recognition of goodwill. Acquisition activity includes acquisitions
in the respective period in addition to purchase accounting adjustments related to previous acquisitions.
The Bancorp completed its annual goodwill impairment test as of September 30, 2024 by performing a qualitative assessment of goodwill at
the reporting unit level to determine whether any indicators of impairment existed. In performing this qualitative assessment, the Bancorp
evaluated events and circumstances since the last impairment analysis, macroeconomic conditions, banking industry and market conditions
and key financial metrics of the Bancorp as well as reporting unit and overall Bancorp financial performance. After assessing the totality of
the events and circumstances, the Bancorp determined that it was not more likely than not that the fair values of the Commercial Banking,
Consumer and Small Business Banking and Wealth and Asset Management reporting units were less than their respective carrying amounts
and, therefore, the quantitative goodwill impairment test was deemed unnecessary.
As further discussed in Note 1, the Bancorp completed an additional goodwill impairment test as of October 1, 2024 to align with the annual
testing date that will be used in future periods. This additional test followed the same methodology as the previously described September 30,
2024 test. This test as of October 1, 2024 also concluded that it was not more likely than not that the fair values of the Bancorp’s reporting
units were less than their respective carrying amounts.
Changes in the net carrying amount of goodwill, by reporting unit, for the years ended December 31, 2024 and 2023 were as follows:
($ in millions)
Commercial
Banking
Consumer and
Small Business
Banking
Wealth and Asset
Management
General
Corporate and
Other
Total
Goodwill
$
3,074
2,580
226
—
5,880
Accumulated impairment losses
(750)
(215)
—
—
(965)
Net carrying value as of December 31, 2022
2,324
2,365
226
—
4,915
Acquisition activity
—
4
—
—
4
Net carrying value as of December 31, 2023
2,324
2,369
226
—
4,919
Sale of business
—
—
(1)
—
(1)
Net carrying value as of December 31, 2024
$
2,324
2,369
225
—
4,918
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
147 Fifth Third Bancorp
11. Intangible Assets
Intangible assets consist of core deposit intangibles, developed technology, customer relationships, and other intangible assets which include
trade names, backlog, operating leases and non-compete agreements. Intangible assets are amortized on either a straight-line or an accelerated
basis over their estimated useful lives and, based on the type of intangible asset, the amortization expense may be recorded in either
commercial banking revenue or other noninterest expense in the Consolidated Statements of Income.
The details of the Bancorp’s intangible assets are shown in the following table:
($ in millions)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
As of December 31, 2024
Core deposit intangibles
$
206
(196)
10
Developed technology
106
(50)
56
Customer relationships
28
(9)
19
Other
13
(8)
5
Total intangible assets
$
353
(263)
90
As of December 31, 2023
Core deposit intangibles
$
209
(184)
25
Developed technology
106
(33)
73
Customer relationships
30
(10)
20
Other
16
(9)
7
Total intangible assets
$
361
(236)
125
As of December 31, 2024, all of the Bancorp’s intangible assets were being amortized. Amortization expense recognized on intangible assets
was $35 million, $43 million and $48 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The Bancorp’s projections of amortization expense shown in the following table are based on existing asset balances as of December 31,
2024. Future amortization expense may vary from these projections. Estimated amortization expense for 2025 through 2029 is as follows:
($ in millions)
Total
2025
$
28
2026
22
2027
14
2028
9
2029
6
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
148 Fifth Third Bancorp
12. Variable Interest Entities
The Bancorp, in the normal course of business, engages in a variety of activities that involve VIEs, which are legal entities that lack sufficient
equity at risk to finance their activities without additional subordinated financial support or the equity investors of the entities as a group lack
any of the characteristics of a controlling interest. The Bancorp evaluates its interest in certain entities to determine if these entities meet the
definition of a VIE and whether the Bancorp is the primary beneficiary and should consolidate the entity based on the variable interests it held
both at inception and when there is a change in circumstances that requires a reconsideration. If the Bancorp is determined to be the primary
beneficiary of a VIE, it must account for the VIE as a consolidated subsidiary. If the Bancorp is determined not to be the primary beneficiary
of a VIE but holds a variable interest in the entity, such variable interests are accounted for under the equity method of accounting or other
accounting standards as appropriate.
Consolidated VIEs
The Bancorp has consolidated VIEs related to an automobile loan securitization and a solar loan securitization where it has determined that it
is the primary beneficiary. The following table provides a summary of assets and liabilities recorded on the Consolidated Balance Sheets for
these consolidated VIEs as of:
($ in millions)
December 31,
2024
December 31,
2023
Assets:
Other short-term investments
$
51
55
Indirect secured consumer loans
967
1,535
Solar energy installation loans
33
38
ALLL
(19)
(28)
Other assets
5
10
Total assets
$
1,037
1,610
Liabilities:
Other liabilities
$
12
14
Long-term debt
889
1,409
Total liabilities
$
901
1,423
In a securitization transaction that occurred in August of 2023, the Bancorp transferred $1.74 billion in aggregate automobile loans to a
bankruptcy remote trust which was deemed to be a VIE. This trust then issued approximately $1.58 billion of asset-backed notes, of which
approximately $79 million were retained by the Bancorp. Additionally, as a result of a previous business acquisition, the Bancorp acquired
interests in a completed securitization transaction in which solar energy installation loans were transferred to a bankruptcy remote trust which
was deemed to be a VIE. Refer to Note 17 for more information.
In each of these securitization transactions, the primary purposes of the VIEs were to issue asset-backed securities with varying levels of
credit subordination and payment priority, as well as residual interests, and to provide access to liquidity for originated loans. The Bancorp
retained residual interests in the VIEs and, therefore, has an obligation to absorb losses and a right to receive benefits from the VIEs that
could potentially be significant to the VIEs. In addition, the Bancorp retained servicing rights for the underlying loans and, therefore, holds
the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs. As a result, the Bancorp
concluded that it is the primary beneficiary of the VIEs and has consolidated these VIEs. The assets of the VIEs are restricted to the
settlement of the asset-backed securities and other obligations of the VIEs. The third-party holders of the asset-backed notes do not have
recourse to the general assets of the Bancorp.
The economic performance of the VIEs is most significantly impacted by the performance of the underlying loans. The principal risks to
which the VIEs are exposed include credit risk and prepayment risk. The credit and prepayment risks are managed through credit
enhancements in the form of reserve accounts, over-collateralization, excess interest on the loans and the subordination of certain classes of
asset-backed securities to other classes.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
149 Fifth Third Bancorp
Non-consolidated VIEs
The following tables provide a summary of assets and liabilities carried on the Consolidated Balance Sheets related to non-consolidated VIEs
for which the Bancorp holds an interest, but is not the primary beneficiary of the VIE, as well as the Bancorp’s maximum exposure to losses
associated with its interests in the entities as of:
December 31, 2024 ($ in millions)
Total Assets
Total Liabilities
Maximum Exposure
CDC investments
$
2,179
741
2,224
Private equity investments
268
—
487
Loans provided to VIEs
4,711
—
7,529
Lease pool entities
30
—
30
Solar loan securitizations
8
—
8
December 31, 2023 ($ in millions)
Total Assets
Total Liabilities
Maximum Exposure
CDC investments
$
2,007
690
2,054
Private equity investments
230
—
400
Loans provided to VIEs
4,274
—
6,395
Lease pool entities
42
—
42
Solar loan securitizations
9
—
9
CDC investments
CDC invests in projects to create affordable housing and revitalize business and residential areas. CDC generally co-invests with other
unrelated companies and/or individuals and typically makes investments in a separate legal entity that owns the property under development.
The entities are usually formed as limited partnerships and LLCs and CDC typically invests as a limited partner/investor member in the form
of equity contributions. The economic performance of the VIEs is driven by the performance of their underlying investment projects as well
as the VIEs’ ability to operate in compliance with the rules and regulations necessary for the qualification of tax credits generated by equity
investments. The Bancorp has determined that it is not the primary beneficiary of these VIEs because it lacks the power to direct the activities
that most significantly impact the economic performance of the underlying project or the VIEs’ ability to operate in compliance with the rules
and regulations necessary for the qualification of tax credits generated by equity investments. This power is held by the managing members
who exercise full and exclusive control of the operations of the VIEs. For information regarding the Bancorp’s accounting for these
investments, refer to Note 1.
The Bancorp’s funding requirements are limited to its invested capital and any additional unfunded commitments for future equity
contributions. The Bancorp’s maximum exposure to loss as a result of its involvement with the VIEs is limited to the carrying amounts of the
investments, including the unfunded commitments. The carrying amounts of these investments, which are included in other assets in the
Consolidated Balance Sheets, and the liabilities related to the unfunded commitments, which are included in other liabilities in the
Consolidated Balance Sheets, are included in the previous tables for all periods presented. Certain CDC investments include undrawn
liquidity and lending commitments which are included in the maximum exposure amount but not included in the Consolidated Balance
Sheets. The Bancorp has no other liquidity arrangements or obligations to purchase assets of the VIEs that would expose the Bancorp to a
loss. In certain arrangements, the general partner/managing member of the VIE has guaranteed a level of projected tax credits to be received
by the limited partners/investor members, thereby minimizing a portion of the Bancorp’s risk.
The Bancorp utilizes the proportional amortization method to account for its qualifying investments in projects that are related to certain
income tax credit programs. Effective with the adoption of ASU 2023-02 on January 1, 2024, these tax credit programs include the LIHTC
program established under Section 42 of the IRC, the New Markets Tax Credit program established under Section 45D of the IRC and the
Rehabilitation Investment Tax Credit program established under Section 47 of the IRC. Prior to the adoption of ASU 2023-02 on January 1,
2024, the Bancorp utilized the proportional amortization method for its LIHTC investments but other tax credit program investments were
accounted for under the equity method.
At December 31, 2024 and 2023, the Bancorp’s CDC investments included $2.0 billion and $1.6 billion, respectively, of tax credit program
investments accounted for under the proportional amortization method. The unfunded commitments related to these investments were $741
million and $684 million at December 31, 2024 and 2023, respectively. The unfunded commitments as of December 31, 2024 are expected to
be funded from 2025 to 2041.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
150 Fifth Third Bancorp
The following table summarizes the impacts to the Consolidated Statements of Income related to the Bancorp’s tax credit program
investments for the years ended December 31:
($ in millions)
Consolidated Statements of
Income Caption(a)
2024
2023
2022
Proportional amortization
Applicable income tax expense
$
200
200
189
Tax credits and other benefits(b)
Applicable income tax expense
(248)
(230)
(219)
Changes in carrying amounts of equity method investments(c)
Other noninterest expense
8
—
—
(a)
The Bancorp did not recognize impairment losses resulting from the forfeiture or ineligibility of tax credits or other circumstances during the years ended
December 31, 2024, 2023 and 2022.
(b)
The related cash flows are classified as operating activities in the Consolidated Statements of Cash Flows primarily in net change in other assets.
(c)
These amounts pertain to tax credit program investments which were accounted for under the equity method as they did not meet the qualification criteria for the
proportional amortization method, effective with the adoption of ASU 2023-02.
Private equity investments
The Bancorp invests as a limited partner in private equity investment funds which provide the Bancorp an opportunity to obtain higher rates
of return on invested capital, while also providing strategic opportunities in certain cases. Each of the limited partnerships has an unrelated
third-party general partner responsible for appointing the fund manager. The Bancorp has not been appointed fund manager for any of these
private equity investments. The funds finance primarily all of their activities from the partners’ capital contributions and investment returns.
The Bancorp has determined that it is not the primary beneficiary of the funds because it does not have the obligation to absorb the funds’
expected losses or the right to receive the funds’ expected residual returns that could potentially be significant to the funds and lacks the
power to direct the activities that most significantly impact the economic performance of the funds. The Bancorp, as a limited partner, does
not have substantive participating or substantive kick-out rights over the general partner. Therefore, the Bancorp accounts for its investments
in these limited partnerships under the equity method of accounting.
The Bancorp is exposed to losses arising from the negative performance of the underlying investments in the private equity investment funds.
As a limited partner, the Bancorp’s maximum exposure to loss is limited to the carrying amounts of the investments plus unfunded
commitments. The carrying amounts of these investments, which are included in other assets in the Consolidated Balance Sheets, are
presented in previous tables. Also, at December 31, 2024 and 2023, the Bancorp’s unfunded commitment amounts to the private equity funds
were $219 million and $170 million, respectively. As part of previous commitments, the Bancorp made capital contributions to private equity
investments of $49 million and $47 million during the years ended December 31, 2024 and 2023, respectively.
Loans provided to VIEs
The Bancorp has provided funding to certain unconsolidated VIEs sponsored by third parties. These VIEs are generally established to finance
certain consumer and business loans originated by third parties. The entities are primarily funded through the issuance of a loan from the
Bancorp or a syndication through which the Bancorp is involved. The sponsor/administrator of the entities is responsible for servicing the
underlying assets in the VIEs. Because the sponsor/administrator, not the Bancorp, holds the servicing responsibilities, which include the
establishment and employment of default mitigation policies and procedures, the Bancorp does not hold the power to direct the activities that
most significantly impact the economic performance of the entity and, therefore, is not the primary beneficiary.
The principal risk to which these entities are exposed is credit risk related to the underlying assets. The Bancorp’s maximum exposure to loss
is equal to the carrying amounts of the loans and unfunded commitments to the VIEs. The Bancorp’s outstanding loans to these VIEs are
included in commercial loans in Note 5. As of December 31, 2024 and 2023, the Bancorp’s unfunded commitments to these entities were
$2.8 billion and $2.1 billion, respectively. The loans and unfunded commitments to these VIEs are included in the Bancorp’s overall analysis
of the ALLL and reserve for unfunded commitments, respectively. The Bancorp does not provide any implicit or explicit liquidity guarantees
or principal value guarantees to these VIEs.
Lease pool entities
The Bancorp is a co-investor with other unrelated leasing companies in three LLCs designed for the purpose of purchasing pools of residual
interests in leases which have been originated or purchased by the other investing member. For each LLC, the leasing company is the
managing member and has full authority over the day-to-day operations of the entity. While the Bancorp holds more than 50% of the equity
interests in each LLC, the operating agreements require both members to consent to significant corporate actions, such as liquidating the
entity or removing the manager. In addition, the Bancorp has a preference with regards to distributions such that all of the Bancorp’s equity
contribution for each pool must be distributed, plus a pre-defined rate of return, before the other member may receive distributions. The
leasing company is also entitled to the return of its investment plus a pre-defined rate of return before any residual profits are distributed to
the members.
The lease pool entities are primarily subject to risk of losses on the lease residuals purchased. The Bancorp’s maximum exposure to loss is
equal to the carrying amount of the investments. The Bancorp has determined that it is not the primary beneficiary of these VIEs because it
does not have the power to direct the activities that most significantly impact the economic performance of the entities. This power is held by
the leasing company, who as managing member controls the servicing of the leases and collection of the proceeds on the residual interests.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
151 Fifth Third Bancorp
Solar loan securitizations
As a result of a previous business acquisition, the Bancorp acquired interests in completed securitization transactions in which solar energy
installation loans were transferred to bankruptcy remote trusts which were deemed to be VIEs. In each of these securitization transactions, the
primary purposes of the VIEs were to issue asset-backed securities with varying levels of credit subordination and payment priority, as well
as residual interests, and to provide access to liquidity for originated loans. The Bancorp retained certain risk retention interests in the classes
of securities issued by the VIEs and retained servicing rights for the underlying loans. The Bancorp’s maximum exposure to loss is equal to
the carrying amount of the investments. The Bancorp has determined that it is not the primary beneficiary of the VIEs because it does not
have the obligation to absorb the VIEs expected losses or the right to receive the VIEs expected residual returns that could potentially be
significant to the VIEs. The risk retention interests held by the Bancorp were included in available-for-sale debt and other securities in the
Consolidated Balance Sheets.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
152 Fifth Third Bancorp
13. Sales of Receivables and Servicing Rights
Residential Mortgage Loan Sales
The Bancorp sold fixed and adjustable-rate residential mortgage loans during the years ended December 31, 2024, 2023 and 2022. In those
sales, the Bancorp obtained servicing responsibilities and provided certain standard representations and warranties; however, the investors
have no recourse to the Bancorp’s other assets for failure of debtors to pay when due. The Bancorp receives servicing fees based on a
percentage of the outstanding balance. The Bancorp identifies classes of servicing assets based on financial asset type and interest rates.
Information related to residential mortgage loan sales and the Bancorp’s mortgage banking activity, which is included in mortgage banking
net revenue in the Consolidated Statements of Income, for the years ended December 31 is as follows:
($ in millions)
2024
2023
2022
Residential mortgage loan sales(a)
$
3,954
4,888
13,307
Origination fees and gains on loan sales
67
79
91
Gross mortgage servicing fees
309
319
310
(a)
Represents the unpaid principal balance at the time of the sale.
Servicing Rights
The Bancorp measures all of its mortgage servicing rights at fair value with changes in fair value reported in mortgage banking net revenue in
the Consolidated Statements of Income.
The following table presents changes in the servicing rights related to residential mortgage loans for the years ended December 31:
($ in millions)
2024
2023
Balance, beginning of period
$
1,737
1,746
Servicing rights originated
49
71
Servicing rights purchased
—
25
Servicing rights sold
(5)
—
Changes in fair value:
Due to changes in inputs or assumptions(a)
74
43
Other changes in fair value(b)
(151)
(148)
Balance, end of period
$
1,704
1,737
(a)
Primarily reflects changes in prepayment speed and OAS assumptions which are updated based on market interest rates.
(b)
Primarily reflects changes due to realized cash flows and the passage of time.
The Bancorp maintains a non-qualifying hedging strategy to manage a portion of the risk associated with changes in the value of the MSR
portfolio. This strategy may include the purchase of free-standing derivatives and various available-for-sale debt and trading debt securities.
The interest income, mark-to-market adjustments and gain or loss from sale activities associated with these portfolios are expected to
economically hedge a portion of the change in value of the MSR portfolio caused by fluctuating OAS, earnings rates and prepayment speeds.
The fair value of the servicing asset is based on the present value of expected future cash flows.
The following table presents activity related to valuations of the MSR portfolio and the impact of the non-qualifying hedging strategy for the
years ended December 31:
($ in millions)
2024
2023
2022
Securities (losses) gains, net - non-qualifying hedges on mortgage servicing rights
$
—
—
(2)
Changes in fair value and settlement of free-standing derivatives purchased to economically
hedge the MSR portfolio(a)
(88)
(43)
(363)
MSR fair value adjustment due to changes in inputs or assumptions(a)
74
43
355
(a)
Included in mortgage banking net revenue in the Consolidated Statements of Income.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
153 Fifth Third Bancorp
The key economic assumptions used in measuring the servicing rights related to residential mortgage loans that continued to be held by the
Bancorp at the date of sale, securitization or purchase resulting from transactions completed during the years ended December 31 were as
follows:
2024
2023
Weighted-
Average Life
(in years)
Prepayment
Speed
(annual)
OAS
(bps)
Weighted-
Average Life
(in years)
Prepayment
Speed
(annual)
OAS
(bps)
Fixed-rate
6.6
12.7 %
488
6.6
12.4 %
596
Adjustable-rate
—
—
—
3.0
27.9
774
At December 31, 2024 and 2023, the Bancorp serviced $94.2 billion and $100.8 billion, respectively, of residential mortgage loans for other
investors. The value of MSRs that continue to be held by the Bancorp is subject to credit, prepayment and interest rate risks on the sold
financial assets. The weighted-average coupon of the MSR portfolio was 3.79% and 3.72% at December 31, 2024 and 2023, respectively.
At December 31, 2024, the sensitivity of the current fair value of residual cash flows to immediate 10%, 20% and 50% adverse changes in
prepayment speed assumptions and immediate 10% and 20% adverse changes in OAS for servicing rights related to residential mortgage
loans are as follows:
($ in millions)(a)
Fair Value
Weighted-
Average Life
(in years)
Prepayment Speed Assumption
OAS Assumption
Impact of Adverse Change
on Fair Value
OAS
(bps)
Impact of Adverse
Change on Fair Value
Rate
10%
20%
50%
10%
20%
Fixed-rate
$
1,701
8.6
5.8 % $
(37)
(72)
(168)
459
$
(35)
(69)
Adjustable-rate
3
5.1
16.9
—
—
(1)
731
—
—
(a)
The impact of the weighted-average default rate on the current fair value of residual cash flows for all scenarios is immaterial.
These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on these variations in
the assumptions typically cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be
linear. The Bancorp believes that variations of these levels are reasonably possible; however, there is the potential that adverse changes in key
assumptions could be even greater. Also, in the previous table, the effect of a variation in a particular assumption on the fair value of the
interests that continue to be held by the Bancorp is calculated without changing any other assumption; in reality, changes in one factor may
result in changes in another (for example, increases in market interest rates may result in lower prepayments), which might magnify or
counteract these sensitivities.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
154 Fifth Third Bancorp
14. Derivative Financial Instruments
The Bancorp maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce certain risks related
to interest rate, prepayment and foreign currency volatility. Additionally, the Bancorp holds derivative instruments for the benefit of its
commercial customers and for other business purposes. The Bancorp does not enter into unhedged speculative derivative positions.
The Bancorp’s interest rate risk management strategy involves modifying the repricing characteristics of certain financial instruments so that
changes in interest rates do not adversely affect the Bancorp’s net interest margin and cash flows. Derivative instruments that the Bancorp
may use as part of its interest rate risk management strategy include interest rate swaps, interest rate floors, interest rate caps, forward
contracts, forward starting interest rate swaps, options, swaptions and TBA securities. Interest rate swap contracts are exchanges of interest
payments, such as fixed-rate payments for floating-rate payments, based on a stated notional amount and maturity date. Interest rate floors
protect against declining rates, while interest rate caps protect against rising interest rates. Forward contracts are contracts in which the buyer
agrees to purchase, and the seller agrees to make delivery of, a specific financial instrument at a predetermined price or yield. Options provide
the purchaser with the right, but not the obligation, to purchase or sell a contracted item during a specified period at an agreed upon price.
Swaptions are financial instruments granting the owner the right, but not the obligation, to enter into or cancel a swap.
Prepayment volatility arises mostly from changes in fair value of the largely fixed-rate MSR portfolio, mortgage loans and mortgage-backed
securities. The Bancorp may enter into various free-standing derivatives (principal-only swaps, interest rate swaptions, interest rate floors,
mortgage options, TBA securities and interest rate swaps) to economically hedge prepayment volatility. Principal-only swaps are total return
swaps based on changes in the value of the underlying mortgage principal-only trust. TBA securities are a forward purchase agreement for a
mortgage-backed securities trade whereby the terms of the security are undefined at the time the trade is made.
Foreign currency volatility occurs as the Bancorp enters into certain loans denominated in foreign currencies. Derivative instruments that the
Bancorp may use to economically hedge these foreign denominated loans include foreign exchange swaps and forward contracts.
The Bancorp also enters into derivative contracts (including foreign exchange contracts, commodity contracts and interest rate contracts) for
the benefit of commercial customers and other business purposes. The Bancorp economically hedges significant exposures related to these
free-standing derivatives by entering into offsetting third-party contracts with approved, reputable and independent counterparties with
substantially matching terms and currencies. Credit risk arises from the possible inability of counterparties to meet the terms of their
contracts. The Bancorp’s exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts.
Credit risk is minimized through credit approvals, limits, counterparty collateral and monitoring procedures.
The fair value of derivative instruments is presented on a gross basis, even when the derivative instruments are subject to master netting
arrangements. Derivative instruments with a positive fair value are reported in other assets in the Consolidated Balance Sheets while
derivative instruments with a negative fair value are reported in other liabilities in the Consolidated Balance Sheets. Cash collateral payables
and receivables associated with the derivative instruments are not added to or netted against the fair value amounts with the exception of
certain variation margin payments that are considered legal settlements of the derivative contracts. For derivative contracts cleared through
certain central clearing parties who have modified their rules to treat variation margin payments as settlements, the variation margin payments
are applied to net the fair value of the respective derivative contracts.
The Bancorp’s derivative contracts include certain contractual features in which either the Bancorp or the counterparties may be required to
provide collateral, typically in the form of cash or securities, as initial margin and to offset changes in the fair value of the derivatives,
including changes in the fair value due to credit risk, either of the Bancorp or the counterparty. In measuring the fair value of its derivative
contracts, the Bancorp considers its own credit risk, taking into consideration collateral maintenance requirements of certain derivative
counterparties and the duration of instruments with counterparties that do not require collateral maintenance.
As of December 31, 2024 and 2023, the balance of collateral held by the Bancorp for derivative assets was $947 million and $1.3 billion,
respectively. For derivative contracts cleared through certain central clearing parties whose rules treat variation margin payments as
settlements of the derivative contract, the payments for variation margin of $403 million and $587 million as of December 31, 2024 and 2023,
respectively, were applied to reduce the respective derivative contracts and were also not included in the total amount of collateral held. As of
December 31, 2024 and 2023, the credit component negatively impacting the fair value of derivative assets associated with customer
accommodation contracts was $4 million and $7 million, respectively.
As of both December 31, 2024 and 2023, the balance of collateral posted by the Bancorp, as either initial margin or due to changes in fair
value of the related derivative contracts, was $1.1 billion. Additionally, as of December 31, 2024 and 2023, $1.2 billion and $721 million,
respectively, of variation margin payments were applied to the respective derivative contracts to reduce the Bancorp’s derivative liabilities
and were also not included in the total amount of collateral posted. Certain of the Bancorp’s derivative liabilities contain credit risk-related
contingent features that could result in the requirement to post additional collateral upon the occurrence of specified events. As of
December 31, 2024 and 2023, the fair value of the additional collateral that could be required to be posted as a result of the credit risk-related
contingent features being triggered was immaterial to the Bancorp’s Consolidated Financial Statements. The posting of collateral has been
determined to remove the need for further consideration of credit risk. As a result, the Bancorp determined that the impact of the Bancorp’s
credit risk to the valuation of its derivative liabilities was immaterial to the Bancorp’s Consolidated Financial Statements.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
155 Fifth Third Bancorp
The Bancorp holds certain derivative instruments that qualify for hedge accounting treatment and are designated as either fair value hedges or
cash flow hedges. Derivative instruments that do not qualify for hedge accounting treatment, or for which hedge accounting is not
established, are held as free-standing derivatives. All customer accommodation derivatives are held as free-standing derivatives.
The following tables reflect the notional amounts and fair values for all derivative instruments included in the Consolidated Balance Sheets as
of:
Fair Value
December 31, 2024 ($ in millions)
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Derivatives Designated as Qualifying Hedging Instruments:
Fair value hedges:
Interest rate swaps related to long-term debt
$
4,955
1
12
Total fair value hedges
1
12
Cash flow hedges:
Interest rate swaps related to C&I loans
11,000
2
4
Interest rate swaps related to C&I loans - forward starting(a)
1,000
1
—
Interest rate swaps related to commercial mortgage and commercial construction loans -
forward starting(a)
4,000
3
—
Total cash flow hedges
6
4
Total derivatives designated as qualifying hedging instruments
7
16
Derivatives Not Designated as Qualifying Hedging Instruments:
Free-standing derivatives - risk management and other business purposes:
Interest rate contracts related to MSR portfolio
3,135
4
4
Forward contracts related to residential mortgage loans measured at fair value(b)
881
8
—
Swap associated with the sale of Visa, Inc. Class B Shares
2,465
—
170
Foreign exchange contracts
104
2
—
Interest-only strips
30
—
—
Interest rate contracts for collateral management
1,000
1
—
Interest rate contracts for LIBOR transition
597
—
—
Other
43
—
—
Total free-standing derivatives - risk management and other business purposes
15
174
Free-standing derivatives - customer accommodation:
Interest rate contracts(c)
87,928
708
924
Interest rate lock commitments
264
2
—
Commodity contracts
16,889
575
564
TBA securities
44
—
—
Foreign exchange contracts
38,640
1,165
1,120
Total free-standing derivatives - customer accommodation
2,450
2,608
Total derivatives not designated as qualifying hedging instruments
2,465
2,782
Total
$
2,472
2,798
(a)
Forward starting swaps will become effective in January and February 2025.
(b)
Includes forward sale and forward purchase contracts which are utilized to manage market risk on residential mortgage loans held for sale and the related
interest rate lock commitments in addition to certain portfolio residential mortgage loans measured at fair value.
(c)
Derivative assets and liabilities are presented net of variation margin of $257 and $45, respectively.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
156 Fifth Third Bancorp
December 31, 2023 ($ in millions)
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Derivatives Designated as Qualifying Hedging Instruments:
Fair value hedges:
Interest rate swaps related to long-term debt
$
5,955
—
32
Total fair value hedges
—
32
Cash flow hedges:
Interest rate floors related to C&I loans
3,000
1
—
Interest rate swaps related to C&I loans
8,000
2
11
Interest rate swaps related to C&I loans - forward starting(a)
6,000
6
1
Interest rate swaps related to commercial mortgage and commercial construction loans -
forward starting(a)
4,000
1
1
Total cash flow hedges
10
13
Total derivatives designated as qualifying hedging instruments
10
45
Derivatives Not Designated as Qualifying Hedging Instruments:
Free-standing derivatives - risk management and other business purposes:
Interest rate contracts related to MSR portfolio
3,205
81
—
Forward contracts related to residential mortgage loans measured at fair value(b)
650
—
5
Swap associated with the sale of Visa, Inc. Class B Shares
4,178
—
168
Foreign exchange contracts
190
—
4
Interest-only strips
39
1
—
Interest rate contracts for collateral management
5,000
1
1
Interest rate contracts for LIBOR transition
597
—
—
Other
30
—
—
Total free-standing derivatives - risk management and other business purposes
83
178
Free-standing derivatives - customer accommodation:
Interest rate contracts(c)(d)
95,079
885
1,162
Interest rate lock commitments
252
5
—
Commodity contracts
17,621
1,051
1,018
TBA securities
27
—
—
Foreign exchange contracts
37,734
643
596
Total free-standing derivatives - customer accommodation
2,584
2,776
Total derivatives not designated as qualifying hedging instruments
2,667
2,954
Total
$
2,677
2,999
Fair Value
(a)
Forward starting swaps will become effective on various dates between June 2024 and February 2025.
(b)
Includes forward sale and forward purchase contracts which are utilized to manage market risk on residential mortgage loans held for sale and the related
interest rate lock commitments in addition to certain portfolio residential mortgage loans measured at fair value.
(c)
Derivative assets and liabilities are presented net of variation margin of $335 and $58, respectively.
(d)
Includes replacement contracts with a notional amount of approximately $675 million which were the result of certain central clearing parties replacing existing
LIBOR-based contracts with multiple separate contracts as part of the LIBOR transition.
Fair Value Hedges
The Bancorp may enter into interest rate swaps to convert its fixed-rate funding to floating-rate or to hedge the exposure to changes in fair
value of a recognized asset attributable to changes in the benchmark interest rate. Decisions to enter into these interest rate swaps are made
primarily through consideration of the asset/liability mix of the Bancorp, the desired asset/liability sensitivity and interest rate levels. As of
December 31, 2024, certain interest rate swaps met the criteria required to qualify for the shortcut method of accounting that permits the
assumption of perfect offset. For all designated fair value hedges of interest rate risk as of December 31, 2024 that were not accounted for
under the shortcut method of accounting, the Bancorp performed an assessment of hedge effectiveness using regression analysis with changes
in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability attributable to the hedged risk
recorded in the same income statement line in current period net income.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
157 Fifth Third Bancorp
The following table reflects the changes in fair value of interest rate contracts, designated as fair value hedges and the changes in fair value of
the related hedged items attributable to the risk being hedged, as well as the line items in the Consolidated Statements of Income in which the
corresponding gains or losses are recorded:
Long-term debt:
Change in fair value of interest rate swaps hedging long-term debt
Interest on long-term debt
$
(66)
29
(460)
Change in fair value of hedged long-term debt attributable to the risk
being hedged
Interest on long-term debt
65
(26)
460
Available-for-sale debt and other securities:
Change in fair value of interest rate swaps hedging available-for-sale
debt and other securities
Interest on securities
—
—
8
Change in fair value of hedged available-for-sale debt and other
securities attributable to the risk being hedged
Interest on securities
—
—
(8)
For the years ended December 31 ($ in millions)
Consolidated Statements of
Income Caption
2024
2023
2022
The following amounts were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of
December 31:
($ in millions)
Consolidated Balance
Sheets Caption
2024
2023
Long-term debt:
Carrying amount of the hedged items
Long-term debt
$
4,838
5,899
Cumulative amount of fair value hedging adjustments included in
the carrying amount of the hedged items
Long-term debt
(103)
(38)
Available-for-sale debt and other securities:
Cumulative amount of fair value hedging adjustments remaining
for hedged items for which hedge accounting has been
discontinued
Available-for-sale debt and other securities
(9)
(11)
Cash Flow Hedges
The Bancorp may enter into interest rate swaps to convert floating-rate assets and liabilities to fixed rates or to hedge certain forecasted
transactions for the variability in cash flows attributable to the contractually specified interest rate. The assets or liabilities may be grouped in
circumstances where they share the same risk exposure that the Bancorp desires to hedge. The Bancorp may also enter into interest rate caps
and floors to limit cash flow variability of floating-rate assets and liabilities. As of December 31, 2024, all hedges designated as cash flow
hedges were assessed for effectiveness using regression analysis. The entire change in the fair value of the interest rate swap included in the
assessment of hedge effectiveness is recorded in AOCI and reclassified from AOCI to current period earnings when the hedged item affects
earnings. As of December 31, 2024, the maximum length of time over which the Bancorp is hedging its exposure to the variability in future
cash flows is 85 months.
Reclassified gains and losses on interest rate contracts related to commercial loans are recorded within interest income in the Consolidated
Statements of Income. As of December 31, 2024 and 2023, respectively, $654 million and $372 million of net deferred losses, net of tax, on
cash flow hedges were recorded in AOCI in the Consolidated Balance Sheets. As of December 31, 2024, $134 million in net unrealized
losses, net of tax, recorded in AOCI are expected to be reclassified into earnings during the next 12 months. This amount could differ from
amounts actually recognized due to changes in interest rates, hedge de-designations or the addition of other hedges subsequent to
December 31, 2024.
During both the years ended December 31, 2024 and 2023, there were no gains or losses reclassified from AOCI into earnings associated
with the discontinuance of cash flow hedges because it was probable that the original forecasted transaction would no longer occur by the end
of the originally specified time period or within the additional period of time as defined by U.S. GAAP.
The following table presents the pre-tax net (losses) gains recorded in the Consolidated Statements of Income and in the Consolidated
Statements of Comprehensive Income relating to derivative instruments designated as cash flow hedges:
For the years ended December 31 ($ in millions)
2024
2023
2022
Amount of pre-tax net losses recognized in OCI
$
(724)
(171)
(1,006)
Amount of pre-tax net (losses) gains reclassified from OCI into net income
(351)
(334)
99
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
158 Fifth Third Bancorp
Free-Standing Derivative Instruments – Risk Management and Other Business Purposes
As part of its overall risk management strategy relative to its mortgage banking activity, the Bancorp may enter into various free-standing
derivatives (principal-only swaps, interest rate swaptions, interest rate floors, mortgage options, TBA securities and interest rate swaps) to
economically hedge changes in fair value of its largely fixed-rate MSR portfolio. Principal-only swaps hedge the spread between mortgage
rates and benchmark rates because these swaps appreciate in value as a result of tightening spreads. Principal-only swaps also provide
prepayment protection by increasing in value when prepayment speeds increase, as opposed to MSRs that lose value in a faster prepayment
environment. Receive-fixed/pay-floating interest rate swaps and swaptions increase in value when interest rates do not increase as quickly as
expected.
The Bancorp enters into forward contracts and mortgage options to economically hedge the changes in fair value of certain residential
mortgage loans held for sale and certain residential mortgage portfolio loans measured at fair value which are due to changes in interest rates.
These contracts generally settle within one year or less. IRLCs issued on residential mortgage loan commitments that will be held for sale are
also considered free-standing derivative instruments and the interest rate exposure on these commitments is economically hedged primarily
with forward contracts. Revaluation gains and losses from free-standing derivatives related to mortgage banking activity are recorded as a
component of mortgage banking net revenue in the Consolidated Statements of Income.
In conjunction with the sale of Visa, Inc. Class B Shares in 2009, the Bancorp entered into a total return swap in which the Bancorp will make
or receive payments based on subsequent changes in the conversion rate of the Class B Shares into Class A Shares. This total return swap is
accounted for as a free-standing derivative. Refer to Note 28 for more information about significant inputs and assumptions used in the
valuation of this instrument.
The Bancorp entered into certain interest rate swap contracts for the purpose of managing its collateral positions across two central clearing
parties. These interest rate swaps were perfectly offsetting positions that allowed the Bancorp to lower the cash posted as required initial
margin at the clearing parties, which reduced its credit exposure to the clearing parties. Given that all relevant terms for these interest rate
swaps are offsetting, these trades create no additional market risk for the Bancorp.
As part of the LIBOR to SOFR transition, the Bancorp received certain interest rate swap contracts from the two central clearing parties that
have moved from an Effective Federal Funds Rate discounting curve to a SOFR discounting curve. The purpose of these interest rate swaps
was to neutralize the impact on collateral requirements due to the change in discounting curves implemented by the central clearing parties.
The net (losses) gains recorded in the Consolidated Statements of Income relating to free-standing derivative instruments used for risk
management and other business purposes are summarized in the following table:
For the years ended December 31 ($ in millions)
Consolidated Statements of
Income Caption
2024
2023
2022
Interest rate contracts:
Interest rate contracts related to MSR portfolio
Mortgage banking net revenue
$
(88)
(43)
(363)
Forward contracts related to residential mortgage loans measured
at fair value
Mortgage banking net revenue
13
(7)
3
Interest-only strips
Other noninterest income
(1)
(3)
—
Foreign exchange contracts:
Foreign exchange contracts for risk management purposes
Other noninterest income
14
(3)
12
Equity contracts:
Swap associated with sale of Visa, Inc. Class B Shares
Other noninterest income
(138)
(94)
(84)
Free-Standing Derivative Instruments – Customer Accommodation
The majority of the free-standing derivative instruments the Bancorp enters into are for the benefit of its commercial customers. These
derivative contracts are not designated against specific assets or liabilities on the Consolidated Balance Sheets or to forecasted transactions
and, therefore, do not qualify for hedge accounting. These instruments include foreign exchange derivative contracts entered into for the
benefit of commercial customers involved in international trade to hedge their exposure to foreign currency fluctuations, commodity contracts
to hedge such items as natural gas and various other derivative contracts. The Bancorp may economically hedge significant exposures related
to these derivative contracts entered into for the benefit of customers by entering into offsetting contracts with approved, reputable,
independent counterparties with substantially matching terms. The Bancorp hedges its interest rate exposure on commercial customer
transactions by executing offsetting swap agreements with primary dealers. Revaluation gains and losses on interest rate, foreign exchange,
commodity and other commercial customer derivative contracts are recorded as a component of capital markets fees or other noninterest
income in the Consolidated Statements of Income.
The Bancorp enters into risk participation agreements, under which the Bancorp assumes credit exposure relating to certain underlying
interest rate derivative contracts. The Bancorp typically only enters into these risk participation agreements in instances in which the Bancorp
has participated in the loan that the underlying interest rate derivative contract was designed to hedge. The Bancorp will make payments
under these agreements if a customer defaults on its obligation to perform under the terms of the underlying interest rate derivative contract.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
159 Fifth Third Bancorp
As of December 31, 2024 and 2023, the total notional amount of the risk participation agreements was $3.2 billion and $3.6 billion,
respectively, and the fair value was a liability of $5 million and $6 million, respectively, which is included in other liabilities in the
Consolidated Balance Sheets. As of December 31, 2024, the risk participation agreements had a weighted-average remaining life of 2.1 years.
The Bancorp’s maximum exposure in the risk participation agreements is contingent on the fair value of the underlying interest rate
derivative contracts in an asset position at the time of default. The Bancorp monitors the credit risk associated with the underlying customers
in the risk participation agreements through the same risk rating system currently utilized for establishing loss reserves in its loan and lease
portfolio.
Risk ratings of the notional amount of risk participation agreements under this risk rating system are summarized in the following table as of
December 31:
($ in millions)
2024
2023
Pass
$
3,138
3,168
Special mention
9
323
Substandard
100
72
Total
$
3,247
3,563
The net gains (losses) recorded in the Consolidated Statements of Income relating to free-standing derivative instruments used for customer
accommodation are summarized in the following table:
For the years ended December 31 ($ in millions)
Consolidated Statements of
Income Caption
2024
2023
2022
Interest rate contracts:
Interest rate contracts for customers (contract revenue)
Capital markets fees
$
29
35
48
Interest rate contracts for customers (credit portion of fair value
adjustment)
Other noninterest expense
4
(2)
10
Interest rate lock commitments
Mortgage banking net revenue
41
52
16
Commodity contracts:
Commodity contracts for customers (contract revenue)
Capital markets fees
18
36
44
Commodity contracts for customers (credit portion of fair value
adjustment)
Other noninterest expense
1
—
—
Foreign exchange contracts:
Foreign exchange contracts for customers (contract revenue)
Capital markets fees
74
89
70
Foreign exchange contracts for customers (contract revenue)
Other noninterest income
6
(14)
8
Foreign exchange contracts for customers (credit portion of fair
value adjustment)
Other noninterest expense
—
4
(3)
Offsetting Derivative Financial Instruments
The Bancorp’s derivative transactions are generally governed by ISDA Master Agreements and similar arrangements, which include
provisions governing the setoff of assets and liabilities between the parties. When the Bancorp has more than one outstanding derivative
transaction with a single counterparty, the setoff provisions contained within these agreements generally allow the non-defaulting party the
right to reduce its liability to the defaulting party by amounts eligible for setoff, including the collateral received as well as eligible offsetting
transactions with that counterparty, irrespective of the currency, place of payment or booking office. The Bancorp’s policy is to present its
derivative assets and derivative liabilities on the Consolidated Balance Sheets on a gross basis, even when provisions allowing for setoff are
in place. However, for derivative contracts cleared through certain central clearing parties who have modified their rules to treat variation
margin payments as settlements, the fair value of the respective derivative contracts is reported net of the variation margin payments.
Collateral amounts included in the tables below consist primarily of cash and highly rated government-backed securities and do not include
variation margin payments for derivative contracts with legal rights of setoff for both periods shown.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
160 Fifth Third Bancorp
The following table provides a summary of offsetting derivative financial instruments:
Gross Amount Recognized in the
Consolidated Balance Sheets(a)
Gross Amounts Not Offset in the
Consolidated Balance Sheets
Derivatives
Collateral(b)
Net Amount
As of December 31, 2024
Derivative assets
$
2,470
(1,378)
(573)
519
Derivative liabilities
2,798
(1,378)
(193)
1,227
As of December 31, 2023
Derivative assets
$
2,672
(1,031)
(877)
764
Derivative liabilities
2,999
(1,031)
(159)
1,809
(a)
Amount does not include IRLCs because these instruments are not subject to master netting or similar arrangements.
(b)
Amount of collateral received as an offset to asset positions or pledged as an offset to liability positions. Collateral values in excess of related derivative amounts
recognized in the Consolidated Balance Sheets were excluded from this table.
15. Other Assets
The following table provides the components of other assets included in the Consolidated Balance Sheets as of December 31:
($ in millions)
2024
2023
Partnership investments
$
2,520
2,326
Derivative instruments
2,472
2,677
Accounts receivable and drafts-in-process
2,381
2,007
Bank owned life insurance
2,135
2,103
Deferred tax assets
1,429
1,438
Accrued interest and fees receivable
796
797
Operating lease right-of-use assets
526
511
Income tax receivable
174
187
Prepaid expenses
142
143
OREO and other repossessed property
32
39
Worldpay, Inc. TRA receivable
—
35
Other
250
275
Total other assets
$
12,857
12,538
In conjunction with Worldpay, Inc.’s IPO in 2012, the Bancorp entered into two TRAs with Worldpay, Inc. The TRAs provide for payments
by Worldpay, Inc. to the Bancorp of 85% of the cash savings actually realized as a result of the increase in tax basis that results from the
historical or future purchase of equity in Worldpay Holding, LLC from the Bancorp or from the exchange of equity units in Worldpay
Holding, LLC for cash or Class A Stock, as well as any tax benefits attributable to payments made under the TRA.
During the fourth quarter of 2019, the Bancorp entered into an agreement with Fidelity National Information Services, Inc. and Worldpay,
Inc. under which Worldpay, Inc. was potentially obligated to pay up to approximately $366 million to the Bancorp to terminate and settle a
portion of the remaining TRA cash flows, totaling an estimated $720 million, upon the exercise of certain call options by Worldpay, Inc. or
certain put options by the Bancorp. In 2019, the Bancorp recognized a gain of approximately $345 million in other noninterest income
associated with these options. The Worldpay, Inc. TRA receivable associated with this transaction, recorded in other assets in the
Consolidated Balance Sheets, was $35 million as of December 31, 2023. Subsequent to December 31, 2023, the Bancorp received cash from
Worldpay, Inc. to settle the receivable that had been recorded as of December 31, 2023 for the remaining put and call options. Neither the
Bancorp nor Worldpay, Inc. have any significant remaining rights or obligations under this agreement.
Separate from the impact of the TRA settlement agreement discussed above, the Bancorp recognized $11 million, $22 million and
$46 million in other noninterest income in the Consolidated Statements of Income associated with the TRA during the years ended
December 31, 2024, 2023 and 2022, respectively. There are no remaining cash flows to be recognized associated with the TRA.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
161 Fifth Third Bancorp
16. Short-Term Borrowings
Borrowings with original maturities of one year or less are classified as short-term and include federal funds purchased and other short-term
borrowings. Federal funds purchased are excess balances in reserve accounts held at the FRB that the Bancorp purchased from other member
banks on an overnight basis. Other short-term borrowings may include FHLB advances, securities sold under repurchase agreements,
derivative collateral and other borrowings with original maturities of one year or less.
The following table summarizes short-term borrowings and weighted-average rates:
2024
2023
($ in millions)
Amount
Rate
Amount
Rate
As of December 31:
Federal funds purchased
$
204
4.30 % $
193
5.31 %
Other short-term borrowings
4,450
4.39
2,861
5.21
Average for the years ended December 31:
Federal funds purchased
$
207
5.21 % $
307
4.96 %
Other short-term borrowings
3,024
5.18
5,044
4.90
Maximum month-end balance for the years ended December 31:
Federal funds purchased
$
247
$
1,143
Other short-term borrowings
5,070
7,423
The following table presents a summary of the Bancorp’s other short-term borrowings as of December 31:
($ in millions)
2024
2023
FHLB advances
$
4,100
2,500
Securities sold under repurchase agreements
273
330
Derivative collateral
19
3
Other borrowed money
58
28
Total other short-term borrowings
$
4,450
2,861
The Bancorp’s securities sold under repurchase agreements are accounted for as secured borrowings and are collateralized by securities
included in available-for-sale debt and other securities and held-to-maturity securities in the Consolidated Balance Sheets. These securities
are subject to changes in market value and, therefore, the Bancorp may increase or decrease the level of securities pledged as collateral based
upon these movements in market value. As of both December 31, 2024 and 2023, all securities sold under repurchase agreements were
secured by agency mortgage-backed securities and the repurchase agreements had an overnight remaining contractual maturity.
At both December 31, 2024 and 2023, the Bancorp’s other borrowed money primarily included obligations recognized by the Bancorp under
ASC Topic 860 related to certain loans sold to GNMA and serviced by the Bancorp. Under ASC Topic 860, once the Bancorp has the
unilateral right to repurchase the GNMA loans due to the borrower missing three consecutive payments, the Bancorp is considered to have
regained effective control over the loan. As such, the Bancorp is required to recognize both the loan and the repurchase liability, regardless of
the intent to repurchase the loans.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
162 Fifth Third Bancorp
17. Long-Term Debt
The following table is a summary of the Bancorp’s long-term borrowings at December 31:
($ in millions)
Maturity
Interest Rate
2024
2023
Parent Company
Senior:
Fixed-rate notes
2024
3.65%
$
—
1,500
Fixed-rate notes
2025
2.375%
750
749
Fixed-rate notes
2027
2.55%
748
748
Fixed-rate/floating-rate notes(c)
2027
1.707%
472
461
Fixed-rate notes
2028
3.95%
648
648
Fixed-rate/floating-rate notes(c)
2028
4.055%
387
386
Fixed-rate/floating-rate notes(c)
2028
6.361%
999
1,013
Fixed-rate/floating-rate notes(c)
2029
6.339%
1,246
1,245
Fixed-rate/floating-rate notes(c)
2030
4.772%
933
944
Fixed-rate/floating-rate notes(c)
2030
4.895%
747
—
Fixed-rate/floating-rate notes(c)
2032
5.631%
996
—
Fixed-rate/floating-rate notes(c)
2033
4.337%
544
561
Subordinated:(a)
Fixed-rate notes
2024
4.30%
—
750
Fixed-rate notes
2038
8.25%
1,051
1,103
Subsidiaries
Senior:
Fixed-rate notes
2025
3.95%
747
727
Fixed-rate/floating-rate notes(e)
2025
5.852%
—
996
Fixed-rate notes
2027
2.25%
599
599
Subordinated:(a)
Fixed-rate notes
2026
3.85%
750
749
Junior subordinated:
Floating-rate debentures(a)(b)
2035
6.04% - 6.31%
54
54
FHLB advances(d)
2025
-
2047
4.91%
1,508
1,510
Notes associated with consolidated VIEs:
Automobile loan securitization
2026
-
2031
5.13% - 5.80%
816
1,305
Solar loan securitization, fixed-rate notes
2038
4.05% - 7.00%
30
35
Other
2025
-
2052
Varies
312
297
Total
$ 14,337
16,380
(a)
In aggregate, $1.3 billion and $1.5 billion qualifies as Tier 2 capital for regulatory capital purposes for the years ended December 31, 2024 and 2023,
respectively.
(b)
These rates reflect the floating rates as of December 31, 2024.
(c)
This rate reflects the fixed rate in effect as of December 31, 2024.
(d)
This rate reflects the weighted-average rate as of December 31, 2024.
(e)
This rate reflects the fixed rate in effect as of December 31, 2023.
The Bancorp pays down long-term debt in accordance with contractual terms over maturity periods summarized in the previous table. The
aggregate annual maturities of long-term debt obligations (based on final maturity dates) as of December 31, 2024 are presented in the
following table:
($ in millions)
Parent Company
Subsidiaries
Total
2025
$
750
756
1,506
2026
—
2,429
2,429
2027
1,220
613
1,833
2028
2,034
587
2,621
2029
1,246
82
1,328
Thereafter
4,271
349
4,620
Total
$
9,521
4,816
14,337
At December 31, 2024, the Bancorp’s long-term borrowings consisted of outstanding principal balances of $14.5 billion, net discounts of $13
million, debt issuance costs of $31 million and reductions for mark-to-market adjustments on its hedged debt of $103 million. At
December 31, 2023, the Bancorp’s long-term borrowings consisted of outstanding principal balances of $16.5 billion, net discounts of $14
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
163 Fifth Third Bancorp
million, debt issuance costs of $32 million and reductions for mark-to-market adjustments on its hedged debt of $38 million. The Bancorp
was in compliance with all debt covenants at December 31, 2024 and 2023.
For further information on a subsequent event related to long-term debt, refer to Note 32.
Parent Company Long-Term Borrowings
Senior notes
On March 14, 2018, the Bancorp issued and sold $650 million of senior notes to third-party investors. The senior notes bear a fixed-rate of
interest of 3.95% per annum. The notes are unsecured, senior obligations of the Bancorp. Payment of the full principal amounts of the notes is
due upon maturity on March 14, 2028. These fixed-rate senior notes will be redeemable by the Bancorp, in whole or in part, on or after the
date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest up
to, but excluding, the redemption date.
On October 28, 2019, the Bancorp issued and sold $750 million of senior notes to third-party investors. The senior notes bore a fixed-rate of
interest of 2.375% per annum and were unsecured, senior obligations of the Bancorp. The notes were outstanding at December 31, 2024 and
subsequently matured on January 28, 2025.
On May 5, 2020, the Bancorp issued and sold $750 million of 2.55% senior fixed-rate notes, with a maturity of seven years, due on May 5,
2027. The notes will be redeemable on or after April 5, 2027, in whole or in part, at any time and from time to time, at the Bancorp’s option
at a redemption price equal to 100% of the aggregate principal amount of the senior fixed-rate notes being redeemed, plus accrued and unpaid
interest thereon, if any, to, but excluding, the redemption date. Additionally, the notes will be redeemable at the Bancorp’s option, in whole or
in part, at any time or from time to time, on or after November 2, 2020, and prior to April 5, 2027, in each case at a redemption price, plus
accrued and unpaid interest thereon, if any, to, but excluding, the redemption date, equal to the greater of: (a) 100% of the aggregate principal
amount of the senior fixed-rate notes being redeemed on that redemption date; and (b) the sum of the present values of the remaining
scheduled payments of principal and interest on the senior fixed-rate notes being redeemed that would be due if the senior fixed-rate notes to
be redeemed matured on April 5, 2027 (not including any portion of such payments of interest accrued to the redemption date) discounted to
the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate
plus 35 bps.
On November 1, 2021, the Bancorp issued and sold $500 million of fixed-rate/floating-rate senior notes which will mature on November 1,
2027. The senior notes bear a fixed rate of interest of 1.707% per annum to, but excluding, November 1, 2026. From, and including,
November 1, 2026 until, but excluding, November 1, 2027, the senior notes will have an interest rate of compounded SOFR plus 0.685%.
The Bancorp entered into an interest rate swap designated as a fair value hedge to convert the fixed-rate period of the notes to a floating rate
of compounded SOFR plus 69 bps, and the Bancorp paid a rate of 5.34% at December 31, 2024. The notes will be redeemable in whole, but
not in part, by the Bancorp on November 1, 2026, the date that is one year prior to the maturity date, at a redemption price equal to 100% of
the principal amount of the notes, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. In addition, the
notes will be redeemable, in whole or in part, by the Bancorp on or after the date that is 30 days prior to the maturity date at a redemption
price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon, if any, to, but excluding,
the redemption date.
On April 25, 2022, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes. $400 million of the notes will bear interest
at a rate of 4.055% per annum to, but excluding, April 25, 2027, followed by an interest rate of compounded SOFR plus 1.355% until
maturity on April 25, 2028. The remaining $600 million of the notes will bear interest at a rate of 4.337% per annum to, but excluding, April
25, 2032, followed by an interest rate of compounded SOFR plus 1.660% until maturity on April 25, 2033. The Bancorp entered into interest
rate swaps designated as fair value hedges to convert the fixed-rate periods of the notes to a floating rate of compounded SOFR plus 1.357%
and a floating rate of compounded SOFR plus 1.666% for the notes due April 25, 2028 and the notes due April 25, 2033, respectively. The
Bancorp paid rates on these swaps of 5.91% and 6.22%, respectively, at December 31, 2024. Each tranche of notes is redeemable in whole at
par plus accrued and unpaid interest one year prior to its maturity date, or may be wholly or partially redeemed 30 days or 90 days prior to
maturity for the 2028 notes and the 2033 notes, respectively.
On July 28, 2022, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes which will mature on July 28, 2030. The
senior notes bear interest at a rate of 4.772% per annum to, but excluding, July 28, 2029. From, and including July 28, 2029 until, but
excluding July 28, 2030, the senior notes will bear interest at a rate of compounded SOFR plus 2.127%. The Bancorp entered into interest rate
swaps designated as fair value hedges to convert the fixed-rate period of the notes to a floating rate of compounded SOFR plus 2.132%, and
the Bancorp paid a rate of 6.67% at December 31, 2024. The senior notes are redeemable in whole at par plus accrued and unpaid interest one
year prior to their maturity date, or may be wholly or partially redeemed 60 days prior to maturity.
On October 27, 2022, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes which will mature on October 27, 2028.
The senior notes will bear interest at a rate of 6.361% per annum to, but excluding, October 27, 2027. From, and including October 27, 2027
until, but excluding October 27, 2028, the senior notes will bear interest at a rate of compounded SOFR plus 2.192%. The Bancorp entered
into an interest rate swap designated as a fair value hedge to convert the fixed-rate period of the notes to a floating rate of compounded SOFR
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
164 Fifth Third Bancorp
plus 2.193%, and the Bancorp paid a rate of 6.74% at December 31, 2024. The senior notes are redeemable in whole at par plus accrued and
unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 30 days prior to maturity.
Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue date and prior to
October 27, 2027, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, or (b) the discounted present value
of the remaining scheduled payments of principal and interest that would be due if the senior notes being redeemed matured on October 27,
2027.
On July 27, 2023, the Bancorp issued and sold $1.25 billion of fixed-rate/floating-rate senior notes which will mature on July 27, 2029. The
senior notes bear interest at a rate of 6.339% per annum to, but excluding, July 27, 2028. From, and including, July 27, 2028 until, but
excluding, July 27, 2029, the senior notes will bear interest at a rate of compounded SOFR plus 2.340%. The senior notes are redeemable in
whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 30 days
prior to maturity. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue
date and prior to July 27, 2028, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, or (b) the discounted
present value of the remaining scheduled payments of principal and interest that would be due if the senior notes being redeemed matured on
July 27, 2028.
On January 29, 2024, the Bancorp issued and sold $1.0 billion of fixed-rate/floating-rate senior notes which will mature on January 29, 2032.
The senior notes will bear interest at a rate of 5.631% per annum to, but excluding, January 29, 2031. From, and including, January 29, 2031
until, but excluding January 29, 2032, the senior notes will bear interest at a rate of compounded SOFR plus 1.840%. The senior notes are
redeemable in whole one year prior to their maturity date, or in whole or in part beginning 60 days prior to maturity, at par plus accrued and
unpaid interest. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue
date and prior to January 29, 2031, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, plus accrued and
unpaid interest, or (b) the present value of the remaining scheduled payments of principal and interest.
On September 6, 2024, the Bancorp issued and sold $750 million of fixed-rate/floating-rate senior notes which will mature on September 6,
2030. The senior notes will bear interest at a rate of 4.895% per annum to, but excluding, September 6, 2029. From, and including, September
6, 2029 until, but excluding, September 6, 2030, the senior notes will bear interest at a rate of compounded SOFR plus 1.486%. The senior
notes are redeemable in whole one year prior to their maturity date, or in whole or in part beginning 30 days prior to maturity, at par plus
accrued and unpaid interest. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days
after the issue date and prior to September 6, 2029, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed,
plus accrued and unpaid interest, or (b) the present value of the remaining scheduled payments of principal and interest.
Subordinated debt
The Bancorp has entered into interest rate swaps to convert part of its subordinated fixed-rate notes due in 2038 to a floating rate. Of the
$1.0 billion in 8.25% subordinated fixed-rate notes due in 2038, the Bancorp entered into an interest rate swap designated as a fair value
hedge to convert $705 million of the notes to a floating rate of compounded SOFR plus 3.31%, and the Bancorp paid a rate of 8.20% on the
hedged portion of these notes at December 31, 2024.
Subsidiary Long-Term Borrowings
Senior and subordinated debt
Medium-term senior notes and subordinated bank notes with maturities ranging from one year to 30 years can be issued by the Bancorp’s
banking subsidiary. Under the Bancorp’s banking subsidiary’s global bank note program, the Bank’s capacity to issue its senior and
subordinated unsecured bank notes is $25.0 billion. As of December 31, 2024, $20.4 billion was available for future issuance under the global
bank note program.
On March 15, 2016, the Bank issued and sold, under its bank notes program, $750 million of 3.85% subordinated fixed-rate notes due on
March 15, 2026. These bank notes will be redeemable by the Bank, in whole or in part, on or after the date that is 30 days prior to the
maturity date at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the
redemption date.
On July 26, 2018, the Bank issued and sold, under its bank notes program, $750 million of 3.95% senior fixed-rate notes due on July 28,
2025. The Bank entered into interest rate swaps designated as fair value hedges to convert these fixed-rate notes to a floating rate of
compounded SOFR plus 1.16%, and the Bancorp paid a rate of 5.70% at December 31, 2024. These bank notes will be redeemable by the
Bank, in whole or in part, on or after the date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest up to, but excluding, the redemption date.
On January 31, 2020, the Bank issued and sold, under its bank notes program, $600 million of 2.25% senior fixed-rate notes due on February
1, 2027. The notes will be redeemable at the Bank’s option, in whole or in part, at any time or from time to time, on or after July 31, 2020,
and prior to January 4, 2027, at a redemption price, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date,
equal to the greater of: (a) 100% of the aggregate principal amount of the notes being redeemed on that redemption date; and (b) the sum of
the present values of the remaining scheduled payments of principal and interest on the notes being redeemed that would be due if the notes
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
165 Fifth Third Bancorp
to be redeemed matured on January 4, 2027. Additionally, the notes will also be redeemable by the Bank, in whole or in part, on or after
January 4, 2027, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the
redemption date.
Junior subordinated debt
The junior subordinated floating-rate debentures due in 2035 were assumed by the Bancorp’s direct nonbank subsidiary holding company as
part of the acquisition of First Charter in June 2008. The obligation was issued to First Charter Capital Trust I and II. The floating-rate capital
securities of First Charter Capital Trust I and II pay a floating rate at three-month CME Term SOFR plus 1.69% and 1.42%, respectively, plus
the tenor spread adjustment of 0.26161%. The Bancorp’s nonbank subsidiary holding company has fully and unconditionally guaranteed all
obligations under the acquired TruPS issued by First Charter Capital Trust I and II.
FHLB advances
At December 31, 2024, FHLB advances have a weighted-average rate of 4.91%, with interest payable monthly. The Bancorp has pledged
$36.6 billion of loans and securities to secure its borrowing capacity at the FHLB which is partially utilized to fund $1.5 billion in FHLB
advances that are outstanding. The FHLB advances mature as follows: $3 million in 2025, $1.5 billion in 2026 and $5 million after 2029.
Notes associated with consolidated VIEs
As discussed in Note 12, the Bancorp was determined to be the primary beneficiary of various VIEs associated with certain automobile and
solar loan securitizations, including an automobile loan securitization transaction that occurred in August of 2023. Third-party holders of this
debt do not have recourse to the general assets of the Bancorp. Approximately $846 million of outstanding notes related to these VIEs were
included in long-term debt in the Consolidated Balance Sheets as of December 31, 2024. The notes mature as follows: $169 million in 2026,
$550 million in 2028 and $127 million after 2029.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
166 Fifth Third Bancorp
18. Commitments, Contingent Liabilities and Guarantees
The Bancorp, in the normal course of business, enters into financial instruments and various agreements to meet the financing needs of its
customers. The Bancorp also enters into certain transactions and agreements to manage its interest rate and prepayment risks, provide
funding, equipment and locations for its operations and invest in its communities. These instruments and agreements involve, to varying
degrees, elements of credit risk, counterparty risk and market risk in excess of the amounts recognized in the Consolidated Balance Sheets.
The creditworthiness of counterparties for all instruments and agreements is evaluated on a case-by-case basis in accordance with the
Bancorp’s credit policies. The Bancorp’s significant commitments, contingent liabilities and guarantees in excess of the amounts recognized
in the Consolidated Balance Sheets are discussed in the following sections.
Commitments
The Bancorp has certain commitments to make future payments under contracts. The following table reflects a summary of significant
commitments as of December 31:
($ in millions)
2024
2023
Commitments to extend credit
$
80,680
81,570
Letters of credit
1,952
2,095
Forward contracts related to residential mortgage loans measured at fair value
881
650
Capital commitments for private equity investments
219
170
Capital expenditures
80
95
Purchase obligations
27
69
Commitments to extend credit
Commitments to extend credit are agreements to lend, typically having fixed expiration dates or other termination clauses that may require
payment of a fee. Since many of the commitments to extend credit may expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash flow requirements. The Bancorp is exposed to credit risk in the event of nonperformance by the
counterparty for the amount of the contract. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest
rates and the Bancorp’s exposure is limited to the replacement value of those commitments. As of December 31, 2024 and 2023, the Bancorp
had a reserve for unfunded commitments, including letters of credit, totaling $134 million and $166 million, respectively, included in other
liabilities in the Consolidated Balance Sheets. The Bancorp monitors the credit risk associated with commitments to extend credit using the
same standard regulatory risk rating systems utilized for its loan and lease portfolio.
Risk ratings of outstanding commitments to extend credit under this risk rating system are summarized in the following table as of December
31:
($ in millions)
2024
2023
Pass
$
78,734
79,593
Special mention
850
1,301
Substandard
1,095
676
Doubtful
1
—
Total commitments to extend credit
$
80,680
81,570
Letters of credit
Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party and
expire as summarized in the following table as of December 31, 2024:
($ in millions)
Less than 1 year(a)
$
980
1 - 5 years(a)
967
Over 5 years
5
Total letters of credit
$
1,952
(a)
Includes $2 and $3 issued on behalf of commercial customers to facilitate trade payments in U.S. dollars and foreign currencies which expire in less than 1 year
and between 1 - 5 years, respectively.
Standby letters of credit accounted for approximately 99% of total letters of credit at both December 31, 2024 and 2023 and are considered
guarantees in accordance with U.S. GAAP. Approximately 76% and 72% of the total standby letters of credit were collateralized as of
December 31, 2024 and 2023, respectively. In the event of nonperformance by the customers, the Bancorp has rights to the underlying
collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The
reserve related to these standby letters of credit, which was included in the total reserve for unfunded commitments, was $12 million and $20
million at December 31, 2024 and 2023, respectively. The Bancorp monitors the credit risk associated with letters of credit using the same
standard regulatory risk rating systems utilized for its loan and lease portfolio.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
167 Fifth Third Bancorp
Risk ratings of outstanding letters of credit under this risk rating system are summarized in the following table as of December 31:
($ in millions)
2024
2023
Pass
$
1,779
1,902
Special mention
60
81
Substandard
110
112
Doubtful
3
—
Total letters of credit
$
1,952
2,095
At December 31, 2024 and 2023, the Bancorp had outstanding letters of credit that were supporting certain securities issued as VRDNs. The
Bancorp facilitates financing for its commercial customers, which consist of companies and municipalities, by marketing the VRDNs to
investors. The VRDNs pay interest to holders at a rate of interest that fluctuates based upon market demand. The VRDNs generally have
long-term maturity dates, but can be tendered by the holder for purchase at par value upon proper advance notice. When the VRDNs are
tendered, a remarketing agent generally finds another investor to purchase the VRDNs to keep the securities outstanding in the market. As of
December 31, 2024 and 2023, total VRDNs, of which FTS was the remarketing agent for all, were $356 million and $400 million,
respectively. As remarketing agent, FTS is responsible for actively remarketing VRDNs to other investors when they have been tendered. If
another investor is not identified, FTS may choose to purchase the VRDNs into inventory at its discretion while it continues to remarket
them. If FTS purchases the VRDNs into inventory, it can subsequently tender back the VRDNs to the issuer’s trustee with proper advance
notice. The Bancorp issued letters of credit, as a credit enhancement, to $45 million and $83 million of the VRDNs remarketed by FTS at
December 31, 2024 and 2023, respectively. These letters of credit are included in the total letters of credit balance provided in the previous
tables. The Bancorp held an immaterial amount and $6 million of these VRDNs in its portfolio and classified them as trading debt securities
at December 31, 2024 and 2023, respectively.
Forward contracts related to residential mortgage loans measured at fair value
The Bancorp enters into forward contracts and mortgage options to economically hedge the change in fair value of certain residential
mortgage loans held for sale, and certain residential mortgage portfolio loans measured at fair value, due to changes in interest rates. The
outstanding notional amounts of these forward contracts are included in the summary of significant commitments table for all periods
presented.
Other commitments
The Bancorp has entered into a limited number of agreements for work related to banking center construction and to purchase goods or
services.
Contingent Liabilities
Legal claims
There are legal claims pending against the Bancorp and its subsidiaries that have arisen in the normal course of business. Refer to Note 19 for
additional information regarding these proceedings.
Guarantees
The Bancorp has performance obligations upon the occurrence of certain events under financial guarantees provided in certain contractual
arrangements as discussed in the following sections.
Residential mortgage loans sold with representation and warranty provisions
Conforming residential mortgage loans sold to unrelated third parties are generally sold with representation and warranty provisions. A
contractual liability arises only in the event of a breach of these representations and warranties and, in general, only when a loss results from
the breach. The Bancorp may be required to repurchase any previously sold loan, or indemnify or make whole the investor or insurer for
which the representation or warranty of the Bancorp proves to be inaccurate, incomplete or misleading. For more information on how the
Bancorp establishes the residential mortgage repurchase reserve, refer to Note 1.
As of December 31, 2024 and 2023, respectively, the Bancorp maintained reserves related to loans sold with representation and warranty
provisions totaling $5 million and $7 million, respectively, included in other liabilities in the Consolidated Balance Sheets.
The Bancorp uses the best information available when estimating its mortgage representation and warranty reserve; however, the estimation
process is inherently uncertain and imprecise and, accordingly, losses in excess of the amounts reserved as of December 31, 2024 are
reasonably possible. The Bancorp currently estimates that it is reasonably possible that it could incur losses related to mortgage representation
and warranty provisions in an amount up to approximately $8 million in excess of amounts reserved. This estimate was derived by modifying
the key assumptions to reflect management’s judgment regarding reasonably possible adverse changes to those assumptions. The actual
repurchase losses could vary significantly from the recorded mortgage representation and warranty reserve or this estimate of reasonably
possible losses, depending on the outcome of various factors, including those previously discussed.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
168 Fifth Third Bancorp
During both the years ended December 31, 2024 and 2023, the Bancorp paid an immaterial amount in the form of make-whole payments and
repurchased $20 million and $54 million, respectively, in outstanding principal of loans to satisfy investor demands. Total repurchase demand
requests during the years ended December 31, 2024 and 2023 were $44 million and $89 million, respectively. Total outstanding repurchase
demand inventory was $7 million and $8 million at December 31, 2024 and 2023, respectively.
Margin accounts
FTS, an indirect wholly-owned subsidiary of the Bancorp, guarantees the collection of all margin account balances held by its brokerage
clearing agent for the benefit of its customers. FTS is responsible for payment to its brokerage clearing agent for any loss, liability, damage,
cost or expense incurred as a result of customers failing to comply with margin or margin maintenance calls on all margin accounts. The
margin account balances held by the brokerage clearing agent were $16 million and $6 million at December 31, 2024 and 2023, respectively.
In the event of customer default, FTS has rights to the underlying collateral provided. Given the existence of the underlying collateral
provided and negligible historical credit losses, the Bancorp does not maintain a loss reserve related to the margin accounts.
Long-term borrowing obligations
The Bancorp had certain fully and unconditionally guaranteed long-term borrowing obligations issued by wholly-owned issuing trust entities
of $62 million at both December 31, 2024 and 2023.
Visa litigation
The Bancorp, as a member bank of Visa prior to Visa’s reorganization and IPO (the “IPO”) of its Class A common shares (the “Class A
Shares”) in 2008, had certain indemnification obligations pursuant to Visa’s certificate of incorporation and bylaws and in accordance with its
membership agreements. In accordance with Visa’s bylaws prior to the IPO, the Bancorp could have been required to indemnify Visa for the
Bancorp’s proportional share of losses based on the pre-IPO membership interests. As part of its reorganization and IPO, the Bancorp’s
indemnification obligation was modified to include only certain known or anticipated litigation (the “Covered Litigation”) as of the date of
the restructuring. This modification triggered a requirement for the Bancorp to recognize a liability equal to the fair value of the
indemnification liability.
In conjunction with the IPO, the Bancorp received 10.1 million of Visa’s Class B common shares (the “Class B Shares”) based on the
Bancorp’s membership percentage in Visa prior to the IPO. The Class B Shares were not transferable (other than to another member bank)
until the later of the third anniversary of the IPO closing or the date on which the Covered Litigation has been resolved; therefore, the
Bancorp’s Class B Shares were classified in other assets and accounted for at their carryover basis of $0. Visa deposited $3 billion of the
proceeds from the IPO into a litigation escrow account, established for the purpose of funding judgments in, or settlements of, the Covered
Litigation. Since then, when Visa’s litigation committee determined that the escrow account was insufficient, Visa issued additional Class A
Shares and deposited the proceeds from the sale of the Class A Shares into the litigation escrow account. When Visa funded the litigation
escrow account, the Class B Shares were subjected to dilution through an adjustment in the conversion rate of Class B Shares into Class A
Shares. On January 23, 2024, Visa announced shareholder approval of changes to its articles of incorporation that would release certain
transfer restrictions on portions of Class B Shares. The program will allow holders of Class B Shares to liquidate some of their shares subject
to assurances that other Visa stockholders will retain existing protection from exposure to the Covered Litigation.
In 2009, the Bancorp completed the sale of Visa, Inc. Class B Shares and entered into a total return swap in which the Bancorp will make or
receive payments based on subsequent changes in the conversion rate of the Class B Shares into Class A Shares. The swap terminates on the
later of the third anniversary of Visa’s IPO or the date on which the Covered Litigation is settled. Refer to Note 28 for additional information
on the valuation of the swap. The counterparty to the swap as a result of its ownership of the Class B Shares will be impacted by dilutive
adjustments to the conversion rate of the Class B Shares into Class A Shares caused by any Covered Litigation losses in excess of the
litigation escrow account. If actual judgments in, or settlements of, the Covered Litigation significantly exceed current expectations, then
additional funding by Visa of the litigation escrow account and the resulting dilution of the Class B Shares could result in a scenario where
the Bancorp’s ultimate exposure associated with the Covered Litigation (the “Visa Litigation Exposure”) exceeds the value of the Class B
Shares owned by the swap counterparty (the “Class B Value”). In the event the Bancorp concludes that it is probable that the Visa Litigation
Exposure exceeds the Class B Value, the Bancorp would record a litigation reserve liability and a corresponding amount of other noninterest
expense for the amount of the excess. Any such litigation reserve liability would be separate and distinct from the fair value derivative
liability associated with the total return swap.
As of the date of the Bancorp’s sale of the Visa Class B Shares and through December 31, 2024, the Bancorp has concluded that it is not
probable that the Visa Litigation Exposure will exceed the Class B Value. Based on this determination, upon the sale of Class B Shares, the
Bancorp reversed its net Visa litigation reserve liability and recognized a free-standing derivative liability associated with the total return
swap. The fair value of the swap liability was $170 million and $168 million at December 31, 2024 and 2023, respectively. Refer to Note 14
and Note 28 for further information.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
169 Fifth Third Bancorp
After the Bancorp’s sale of the Class B Shares, Visa has funded additional amounts into the litigation escrow account which have resulted in
further dilutive adjustments to the conversion of Class B Shares into Class A Shares, and along with other terms of the total return swap,
required the Bancorp to make cash payments in varying amounts to the swap counterparty as follows:
Period ($ in millions)
Visa
Funding Amount
Bancorp Cash
Payment Amount
Q2 2010
$
500
20
Q4 2010
800
35
Q2 2011
400
19
Q1 2012
1,565
75
Q3 2012
150
6
Q3 2014
450
18
Q2 2018
600
26
Q3 2019
300
12
Q4 2021
250
11
Q2 2022
600
25
Q4 2022
350
15
Q2 2023
500
21
Q3 2023
150
6
Q3 2024
1,500
65
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
170 Fifth Third Bancorp
19. Legal and Regulatory Proceedings
Litigation
Visa/MasterCard Merchant Interchange Litigation
In April 2006, the Bancorp was added as a defendant in a consolidated antitrust class action lawsuit originally filed against Visa®,
MasterCard® and several other major financial institutions in the United States District Court for the Eastern District of New York (In re:
Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 5-MD-1720). The plaintiffs, merchants operating
commercial businesses throughout the U.S. and trade associations, claimed that the interchange fees charged by card-issuing banks were
unreasonable and sought injunctive relief and unspecified damages. In addition to being a named defendant, the Bancorp is currently also
subject to a possible indemnification obligation of Visa as discussed in Note 18 and has also entered into judgment and loss sharing
agreements with Visa, MasterCard and certain other named defendants. In October 2012, the parties to the litigation entered into a settlement
agreement that was initially approved by the trial court but reversed by the U.S. Second Circuit Court of Appeals and remanded to the district
court for further proceedings. More than 500 of the merchants who requested exclusion from the class filed separate federal lawsuits against
Visa, MasterCard and certain other defendants alleging similar antitrust violations. These individual federal lawsuits were transferred to the
United States District Court for the Eastern District of New York. While the Bancorp is only named as a defendant in one of the individual
federal lawsuits, it may have obligations pursuant to indemnification arrangements and/or the judgment or loss sharing agreements noted
above. On September 17, 2018, the defendants in the consolidated class action signed a second settlement agreement (the “Amended
Settlement Agreement”) resolving the claims seeking monetary damages by the proposed plaintiffs’ class (the “Plaintiff Damages Class”) and
superseding the original settlement agreement entered into in October 2012. The Amended Settlement Agreement included, among other
terms, a release from participating class members for liability for claims that accrue no later than five years after the Amended Settlement
Agreement becomes final. The Amended Settlement Agreement provided for a total payment by all defendants of approximately
$6.24 billion, composed of approximately $5.34 billion held in escrow plus an additional $900 million in new funds. Pursuant to the terms of
the Settlement Agreement, $700 million of the additional $900 million has been returned to the defendants due to the level of opt-outs from
the class. The Bancorp’s allocated share of the settlement is within existing reserves, including funds maintained in escrow. On December 13,
2019, the Court entered an order granting final approval for the settlement, and on March 15, 2023, the Second Circuit affirmed that order.
The settlement does not resolve the claims of the separate proposed plaintiffs’ class seeking injunctive relief or the claims of merchants who
have opted out of the proposed class settlement and are pursuing, or may in the future decide to pursue, private lawsuits. Several of the
remaining opt-out cases have now been set for a trial scheduled to commence on October 20, 2025 in the matter of Target Corp. et al. v. Visa
Inc. et al., Case No. 13 Civ. 3477 (AKH) (S.D.N.Y.). On September 27, 2021, the Court overseeing the class litigation entered an order
certifying a class of merchants pursuing claims for injunctive relief. On March 26, 2024, Plaintiffs filed a motion seeking preliminary
approval of a settlement that would resolve class claims for injunctive relief. On June 13, 2024, the Court held a hearing on Plaintiffs’ motion
for preliminary approval of the injunctive relief settlement, and on June 25, 2024, the Court issued an order denying the request for
preliminary approval of the settlement. The ultimate outcome in this matter, including the timing of resolution, remains uncertain. Refer to
Note 18 for further information.
Klopfenstein v. Fifth Third Bank
On August 3, 2012, William Klopfenstein and Adam McKinney filed a lawsuit against Fifth Third Bank in the United States District Court
for the Northern District of Ohio (Klopfenstein et al. v. Fifth Third Bank), alleging that the 120% APR that Fifth Third disclosed on its Early
Access program was misleading. Early Access is a deposit-advance program offered to eligible customers with checking accounts. The
plaintiffs sought to represent a nationwide class of customers who used the Early Access program and repaid their cash advances within 30
days. On October 31, 2012, the case was transferred to the United States District Court for the Southern District of Ohio. In 2013, four similar
putative class action lawsuits were filed against Fifth Third Bank in federal courts throughout the country (Lori and Danielle Laskaris v. Fifth
Third Bank, Janet Fyock v. Fifth Third Bank, Jesse McQuillen v. Fifth Third Bank, and Brian Harrison v. Fifth Third Bank). Those four
lawsuits were transferred to the Southern District of Ohio and consolidated with the original lawsuit as In re: Fifth Third Early Access Cash
Advance Litigation (Case No. 1:12-CV-851). On behalf of a putative class, the plaintiffs sought unspecified monetary and statutory damages,
injunctive relief, punitive damages, attorneys’ fees, and pre- and post-judgment interest. On March 30, 2015, the court dismissed all claims
alleged in the consolidated lawsuit except a claim under the TILA. On May 28, 2019, the Sixth Circuit Court of Appeals reversed the
dismissal of plaintiffs’ breach of contract claim and remanded for further proceedings. The plaintiffs’ claimed damages for the alleged breach
of contract claim exceed $440 million, plus prejudgment interest. On March 26, 2021, the trial court granted plaintiffs’ motion for class
certification. On March 29, 2023, the trial court issued an order granting summary judgement on plaintiffs’ TILA claim, with statutory
damages capped at $2 million plus costs and attorney fees. Plaintiffs’ claim for breach of contract proceeded to trial beginning on April 17,
2023. On April 27, 2023, the jury returned a verdict in favor of the Bank, finding a breach of contract, but that the voluntary payment doctrine
is a complete defense to the breach of contract claim. On September 30, 2024, the trial court issued a decision denying post-trial motions
related to the jury verdict. On October 30, 2024, plaintiffs filed a notice of appeal, and on November 7, 2024, Fifth Third filed a notice of
cross appeal.
Bureau of Consumer Financial Protection v. Fifth Third Bank, National Association
On March 9, 2020, the CFPB filed a lawsuit against Fifth Third in the United States District Court for the Northern District of Illinois entitled
CFPB v. Fifth Third Bank, National Association, Case No. 1:20-CV-1683, alleging violations of the Consumer Financial Protection Act,
TILA, and Truth in Savings Act related to Fifth Third’s alleged opening of unspecified numbers of allegedly unauthorized credit card,
savings, checking, online banking and early access accounts from 2010 through 2016. The parties agreed to the entry of a Stipulated Final
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
171 Fifth Third Bancorp
Judgment and Order on July 9, 2024 to resolve this matter, pursuant to which Fifth Third, without admitting or denying any of the allegations
in the suit except as specified in the order, agreed to pay a civil monetary penalty of $15 million, agreed to maintain existing policies around
its consumer sales incentives, agreed to create a compliance plan to ensure its account opening practices comply with law and the order and
agreed to provide a redress plan to remediate certain customers with checking, savings, or credit card accounts opened beginning January 1,
2010 and ending December 31, 2016.
Concurrently with the Stipulated Final Judgment and Order, Fifth Third, without admitting or denying any of the findings of fact or
conclusions of law (except to establish jurisdiction), has also agreed to entry of a Consent Order related to a since-discontinued program in its
auto lending business that placed collateral protection insurance on certain auto loans. Under the Consent Order, Fifth Third has agreed to pay
a $5 million civil monetary penalty related to those issues, maintain existing policy changes related to its auto servicing practices, agreed to
create a compliance plan to ensure its compliance with the order and provide a redress plan to remediate certain customers within a redress
period beginning July 21, 2011 and ending December 31, 2020.
Howards v. Fifth Third Bank
On March 8, 2018, Plaintiff Troy Howards filed a putative class action against Fifth Third Bank in the United States District Court for the
Central District of California (Case No. 1:18-CV-869, S.D. OH 2018), alleging that Fifth Third improperly charged certain fees related to
insufficient funds, customer overdrafts, and out-of-network ATM use. Venue was subsequently transferred to the United States District Court
for the Southern District of Ohio. Plaintiff filed claims for breach of contract, breach of the implied covenant of good faith and fair dealing,
for violation of the California Unfair Competition Law (Ca. Bus. & Prof. Code sec. 17200, et seq.), and the California Consumer Legal
Remedies Act (Cal. Civ. Code sec. 1750 et seq.). Plaintiff seeks to represent putative nationwide classes and California classes of consumers
allegedly charged improper repeated insufficient funds fees, improper overdraft fees, and fees for out-of-network ATM use from the
beginning of the applicable statute of limitations to present. Plaintiff seeks damages of restitution and disgorgement in the amount of the
allegedly unlawfully charged fees, damages proved at trial together with interest as allowed by applicable law. Fifth Third filed a motion to
dismiss all claims. On February 6, 2023, the trial court issued an order dismissing the Plaintiff’s breach of contract claim with respect to out-
of-network ATM fees and dismissing the two claims for violations of California consumer protection statutes. The Court denied Fifth Third’s
motion to dismiss as it relates to the claims for breach of contract and breach of the implied covenant of good faith and fair dealing for certain
customer overdrafts and insufficient funds fees. The case is in discovery, and no trial date has been set.
Other litigation
The Bancorp and its subsidiaries are not parties to any other material litigation at this time. However, there are other litigation matters that
arise in the normal course of business, which include, or may include, claims related to product features, pricing and other lending practices.
For example, Fifth Third Bank, National Association is currently responding to lawsuits regarding bankruptcies and practices of residential
solar installers as well as lending practices of credit providers to this market, which includes Dividend Solar Finance, LLC, which the Bank
acquired in May 2022. While it is impossible to ascertain the ultimate resolution or range of financial liability with respect to these contingent
matters, management believes that the resulting liability, if any, from these other actions would not have a material effect upon the Bancorp’s
consolidated financial position, results of operations or cash flows. However, it is possible that the ultimate resolution of a matter, if
unfavorable, may be material to the Bancorp’s consolidated financial position, results of operations or cash flows.
Governmental Investigations and Proceedings
The Bancorp and/or its affiliates are or may become involved in information-gathering requests, reviews, investigations and proceedings
(both formal and informal) by various governmental regulatory agencies and law enforcement authorities, including but not limited to the
FRB, OCC, CFPB, SEC, FINRA, U.S. Department of Justice, etc., as well as state and other governmental authorities and self-regulatory
bodies regarding their respective businesses. For example, Fifth Third Bank, National Association is currently cooperating with investigations
related to several civil investigative demands by a number of state attorneys general regarding the residential solar installation industry and
lending practices of credit providers to this market, which includes Dividend Solar Finance, LLC, which the Bank acquired in May 2022.
Among these are investigations related to multiple lenders by a coalition of 17 state attorneys general relating to the Chapter 7 bankruptcy
filing of one such installer, Power Home Solar, LLC, dba Pink Energy. Dividend Solar Finance, LLC financed installations of Power Home
Solar, LLC customers in 11 of the 17 states represented by the coalition. Additional matters will likely arise from time to time. Any of these
matters may result in material adverse consequences or reputational harm to the Bancorp, its affiliates and/or their respective directors,
officers and other personnel, including adverse judgments, findings, settlements, fines, penalties, orders, injunctions or other actions,
amendments and/or restatements of the Bancorp’s SEC filings and/or financial statements, as applicable, and/or determinations of material
weaknesses in our disclosure controls and procedures. Investigations by regulatory authorities may from time to time result in civil or
criminal referrals to law enforcement. Additionally, in some cases, regulatory authorities may take supervisory actions that are considered to
be confidential supervisory information which may not be publicly disclosed.
Reasonably Possible Losses in Excess of Accruals
The Bancorp and its subsidiaries are parties to numerous claims and lawsuits as well as threatened or potential actions or claims concerning
matters arising from the conduct of its business activities. The outcome of claims or litigation and the timing of ultimate resolution are
inherently difficult to predict. The following factors, among others, contribute to this lack of predictability: claims often include significant
legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete
and material facts may be disputed or unsubstantiated. As a result of these factors, the Bancorp is not always able to provide an estimate of
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
172 Fifth Third Bancorp
the range of reasonably possible outcomes for each claim. An accrual for a potential litigation loss is established when information related to
the loss contingency indicates both that a loss is probable and that the amount of loss can be reasonably estimated. Any such accrual is
adjusted from time to time thereafter as appropriate to reflect changes in circumstances. The Bancorp also determines, when possible (due to
the uncertainties described above), estimates of reasonably possible losses or ranges of reasonably possible losses, in excess of amounts
accrued. Under U.S. GAAP, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but
less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” Thus, references to the upper end of
the range of reasonably possible loss for cases in which the Bancorp is able to estimate a range of reasonably possible loss mean the upper
end of the range of loss for cases for which the Bancorp believes the risk of loss is more than slight. For matters where the Bancorp is able to
estimate such possible losses or ranges of possible losses, the Bancorp currently estimates that it is reasonably possible that it could incur
losses related to legal and regulatory proceedings in an aggregate amount up to approximately $92 million in excess of amounts accrued, with
it also being reasonably possible that no losses will be incurred in these matters. The estimates included in this amount are based on the
Bancorp’s analysis of currently available information, and as new information is obtained the Bancorp may change its estimates.
For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in
excess of the established accrual that cannot be estimated. Based on information currently available, advice of counsel, available insurance
coverage and established accruals, the Bancorp believes that the eventual outcome of the actions against the Bancorp and/or its subsidiaries,
including the matters described above, will not, individually or in the aggregate, have a material adverse effect on the Bancorp’s consolidated
financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if
unfavorable, may be material to the Bancorp’s results of operations for any particular period, depending, in part, upon the size of the loss or
liability imposed and the operating results for the applicable period.
20. Related Party Transactions
The Bancorp maintains written policies and procedures covering related party transactions with principal shareholders, directors and
executives of the Bancorp. These policies and procedures cover transactions such as employee-stock purchase loans, personal lines of credit,
residential secured loans, overdrafts, letters of credit and increases in indebtedness. Such transactions are subject to the Bancorp’s normal
underwriting and approval procedures. Prior to approving a loan to a related party, Compliance Risk Management must review and determine
whether the transaction requires approval from or a post notification to the Bancorp’s Board of Directors. At December 31, 2024 and 2023,
certain directors, executive officers, principal holders of Bancorp common stock and their related interests were indebted, including undrawn
commitments to lend, to the Bancorp’s banking subsidiary.
The following table summarizes the Bancorp’s lending activities with its principal shareholders, directors, executives and their related
interests at December 31:
($ in millions)
2024
2023
Commitments to lend, net of participations:
Directors and their affiliated companies
$
162
165
Executive officers
3
3
Total
$
165
168
Outstanding balance on loans, net of participations and undrawn commitments
$
56
111
The commitments to lend are in the form of loans and guarantees for various business and personal interests. This indebtedness was incurred
in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated parties. This indebtedness does not involve more than the normal risk of repayment or present other
features unfavorable to the Bancorp.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
173 Fifth Third Bancorp
21. Income Taxes
The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of applicable income taxes
included in the Consolidated Statements of Income for the years ended December 31:
($ in millions)
2024
2023
2022
Current income tax expense:
U.S. Federal income taxes
$
452
647
570
State and local income taxes
75
96
126
Foreign income taxes
3
2
11
Total current income tax expense
530
745
707
Deferred income tax expense (benefit):
U.S. Federal income taxes
84
(81)
(31)
State and local income taxes
(13)
(23)
(29)
Foreign income taxes
1
(2)
—
Total deferred income tax expense (benefit)
72
(106)
(60)
Applicable income tax expense
$
602
639
647
The current U.S. Federal income taxes above include proportional amortization for qualifying CDC investments of $200 million, $200
million and $189 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The following is a reconciliation between the statutory U.S. Federal income tax rate and the Bancorp’s effective tax rate for the years ended
December 31:
2024
2023
2022
Statutory tax rate
21.0 %
21.0
21.0
Increase (decrease) resulting from:
State taxes, net of federal benefit
1.7
1.9
2.5
Tax-exempt income
(0.9)
(0.8)
(0.8)
Tax credits and other tax benefits from CDC investments
(8.5)
(7.7)
(7.1)
Proportional amortization of qualifying CDC investments
6.8
6.7
6.1
Other tax credits
(0.1)
(0.7)
(0.4)
Other, net
0.6
1.0
(0.3)
Effective tax rate
20.6 %
21.4
21.0
As discussed in Note 1, the Bancorp adopted ASU 2023-02 on January 1, 2024 which expanded the permitted usage of the proportional
amortization method to include additional tax credit programs beyond qualifying LIHTC structures if certain conditions are met. As a result,
tax credits and other tax benefits from CDC investments in the rate reconciliation table for the year ended December 31, 2024 include Low-
Income Housing, New Markets and Rehabilitation Investment tax credits and other related tax benefits from those investments. For the years
ended December 31, 2023 and 2022, prior to the adoption of ASU 2023-02, tax credits and other tax benefits from CDC investments only
include the tax credits and other related tax benefits pertaining to investments in the Low-Income Housing tax credit program, with the credits
arising from the Bancorp’s investments in the New Markets and Rehabilitation Investment tax credit programs presented as a component of
other tax credits. Other tax credits in the rate reconciliation table also include the Increasing Research Activities and Qualified Zone Academy
Bond tax credits. Tax-exempt income in the rate reconciliation table includes interest on municipal bonds, interest on tax-exempt lending, and
income on life insurance policies held by the Bancorp.
The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:
($ in millions)
2024
2023
2022
Unrecognized tax benefits at January 1
$
97
94
102
Gross increases for tax positions taken during prior period
12
14
3
Gross decreases for tax positions taken during prior period
(7)
(5)
(5)
Gross increases for tax positions taken during current period
21
15
11
Settlements with taxing authorities
(1)
(1)
—
Lapse of applicable statute of limitations
(21)
(20)
(17)
Unrecognized tax benefits at December 31(a)
$
101
97
94
(a)
All amounts represent unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.
The Bancorp’s unrecognized tax benefits as of December 31, 2024, 2023 and 2022 primarily related to state income tax exposures from
taking tax positions where the Bancorp believes it is likely that, upon examination, a state would take a position contrary to the position taken
by the Bancorp.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
174 Fifth Third Bancorp
While it is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of the Bancorp’s uncertain tax
positions could increase or decrease during the next twelve months, the Bancorp believes it is unlikely that its unrecognized tax benefits will
change by a material amount during the next twelve months.
Deferred income taxes are comprised of the following items at December 31:
($ in millions)
2024
2023
Deferred tax assets:
Other comprehensive income
$
1,459
1,395
Allowance for loan and lease losses
494
488
Loan origination fees and costs
199
195
Deferred compensation
115
114
Reserves
38
33
State deferred taxes
35
43
Reserves for unfunded commitments
28
35
Federal net operating loss carryforwards
7
19
State net operating loss carryforwards
6
11
Other
138
135
Total deferred tax assets
$
2,519
2,468
Deferred tax liabilities:
Lease financing
$
583
551
MSRs and related economic hedges
153
141
Bank premises and equipment
76
68
Goodwill and intangible assets
64
70
Investments in joint ventures and partnership interests
48
58
Other
168
143
Total deferred tax liabilities
$
1,092
1,031
Total net deferred tax asset
$
1,427
1,437
At December 31, 2024 and 2023, the Bancorp recorded deferred tax assets of $6 million and $11 million, respectively, related to state net
operating loss carryforwards. The deferred tax assets relating to state net operating losses are presented net of specific valuation allowances of
$7 million and $5 million at December 31, 2024 and 2023, respectively. If these carryforwards are not utilized, they will expire in varying
amounts through 2044.
The Bancorp has determined that a valuation allowance is not needed against the remaining deferred tax assets as of December 31, 2024 or
2023. The Bancorp considered all of the positive and negative evidence available to determine whether it is more likely than not that the
deferred tax assets will ultimately be realized and, based upon that evidence, the Bancorp believes it is more likely than not that the deferred
tax assets recorded at December 31, 2024 and 2023 will ultimately be realized. The Bancorp reached this conclusion as it is expected that the
Bancorp’s remaining deferred tax assets will be realized through the reversal of its existing taxable temporary differences, its projected future
taxable income and tax-planning strategies.
The statute of limitations for the Bancorp’s federal income tax returns remains open for tax years 2020 through 2024. On occasion, as various
state and local taxing jurisdictions examine the returns of the Bancorp and its subsidiaries, the Bancorp may agree to extend the statute of
limitations for a reasonable period of time. Otherwise, the statutes of limitations for state income tax returns remain open only for tax years in
accordance with each state’s statutes.
Any interest and penalties incurred in connection with income taxes are recorded as a component of applicable income tax expense in the
Consolidated Financial Statements. During the years ended December 31, 2024, 2023 and 2022, the Bancorp recognized $1 million, $2
million and $1 million, respectively, of interest expense in connection with income taxes. At December 31, 2024 and 2023, the Bancorp had
accrued interest liabilities, net of the related tax benefits, of $11 million and $10 million, respectively. No material liabilities were recorded
for penalties related to income taxes.
Retained earnings at both December 31, 2024 and 2023 included $157 million in allocations of earnings for bad debt deductions of former
thrift subsidiaries for which no income tax has been provided. Under current tax law, if certain of the Bancorp’s subsidiaries use these bad
debt reserves for purposes other than to absorb bad debt losses, they will be subject to federal income tax at the current corporate tax rate.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
175 Fifth Third Bancorp
22. Retirement and Benefit Plans
The Bancorp’s qualified defined benefit plan’s benefits were frozen in 1998, except for grandfathered employees. The Bancorp’s other
defined benefit retirement plans consist of non-qualified plans which are frozen and funded on an as-needed basis. A majority of these plans
were obtained in acquisitions and are included with the qualified defined benefit plan in the following tables (“the Plan”). The Bancorp
recognizes the overfunded or underfunded status of the Plan in other assets and accrued taxes, interest and expenses, respectively, in the
Consolidated Balance Sheets.
The following table summarizes the defined benefit retirement plans as of and for the years ended December 31:
($ in millions)
2024
2023
Fair value of plan assets at January 1
$
102
109
Actual return on assets
(3)
5
Contributions
1
2
Settlement
(7)
(7)
Benefits paid
(6)
(7)
Fair value of plan assets at December 31
$
87
102
Projected benefit obligation at January 1
$
113
120
Interest cost
5
6
Settlement
(7)
(7)
Actuarial (gain) loss
(5)
1
Benefits paid
(6)
(7)
Projected benefit obligation at December 31
$
100
113
Underfunded projected benefit obligation at December 31
$
(13)
(11)
Accumulated benefit obligation at December 31(a)
$
100
113
(a)
Since the Plan’s benefits are frozen, the rate of compensation increase is no longer an assumption used to calculate the accumulated benefit obligation. Therefore,
the accumulated benefit obligation was the same as the projected benefit obligation at both December 31, 2024 and 2023.
The following table summarizes net periodic benefit cost and other changes in the Plan’s assets and benefit obligations recognized in OCI for
the years ended December 31:
($ in millions)
2024
2023
2022
Components of net periodic benefit cost:
Interest cost
$
5
6
5
Expected return on assets
(5)
(5)
(4)
Amortization of net actuarial loss
2
2
3
Settlement
2
2
3
Net periodic benefit cost
$
4
5
7
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)
$
2
1
(11)
Amortization of net actuarial loss
(2)
(2)
(3)
Settlement
(1)
(2)
(3)
Total recognized in other comprehensive income
(1)
(3)
(17)
Total recognized in net periodic benefit cost and other comprehensive income
$
3
2
(10)
Fair Value Measurements of Plan Assets
The following tables summarize Plan assets measured at fair value on a recurring basis as of December 31:
Fair Value Measurements Using(a)
2024 ($ in millions)
Level 1
Level 2
Level 3
Total Fair Value
Cash equivalents
$
3
—
—
3
Debt securities:
U.S. Treasury and federal agencies securities
48
3
—
51
Asset-backed securities and other debt securities(b)
—
33
—
33
Total debt securities
$
48
36
—
84
Total Plan assets
$
51
36
—
87
(a)
For further information on fair value hierarchy levels, refer to Note 1.
(b)
Includes corporate bonds.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
176 Fifth Third Bancorp
Fair Value Measurements Using(a)
2023 ($ in millions)
Level 1
Level 2
Level 3
Total Fair Value
Cash equivalents
$
7
—
—
7
Debt securities:
U.S. Treasury and federal agencies securities
52
3
—
55
Asset-backed securities and other debt securities(b)
—
40
—
40
Total debt securities
$
52
43
—
95
Total Plan assets
$
59
43
—
102
(a)
For further information on fair value hierarchy levels, refer to Note 1.
(b)
Includes corporate bonds.
The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification
of such instruments pursuant to the valuation hierarchy.
Cash equivalents
Cash equivalents are comprised of money market mutual funds that invest in short-term money market instruments that are issued and
payable in U.S. dollars. The Plan measures its cash equivalent funds that are exchange-traded using the fund’s quoted price, which is in an
active market. Therefore, these investments are classified within Level 1 of the valuation hierarchy.
Debt securities
Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities
include U.S. Treasury securities. If quoted market prices are not available, then fair values are estimated using pricing models which
primarily utilize quoted prices of securities with similar characteristics. Examples of such instruments, which are classified within Level 2 of
the valuation hierarchy, include federal agencies securities and asset-backed securities and other debt securities.
Plan Assumptions
The Plan’s assumptions are evaluated annually and are updated as necessary. The discount rate assumption reflects the yield on a portfolio of
high quality fixed-income instruments that have a similar duration to the Plan’s liabilities. The expected long-term rate of return assumption
reflects the average return expected on the assets invested to provide for the Plan’s liabilities. In determining the expected long-term rate of
return, the Bancorp evaluated actuarial and economic inputs, including long-term inflation rate assumptions and broad equity and bond
indices long-term return projections, as well as actual long-term historical plan performance.
The following table summarizes the weighted-average plan assumptions for the years ended December 31:
2024
2023
2022
For measuring benefit obligations at year end:
Discount rate
5.58 %
5.04
5.37
For measuring net periodic benefit cost:
Discount rate
5.08
5.50
3.69
Expected return on plan assets
5.09
5.52
3.91
Lowering both the expected rate of return on the plan assets and the discount rate by 0.25% would have increased the 2024 pension expense
by approximately $1 million.
Based on the actuarial assumptions, the Bancorp expects to contribute $1 million to the Plan in 2025. Estimated pension benefit payments are
$12 million for 2025, $12 million for 2026, $11 million for 2027, $10 million for 2028 and $10 million for 2029. The total estimated
payments for the years 2030 through 2034 is $39 million.
Investment Policies and Strategies
The Bancorp’s policy for the investment of Plan assets is to employ investment strategies that achieve a range of weighted-average target
asset allocations relating to equity securities, fixed-income securities (including U.S. Treasury and federal agencies securities, mortgage-
backed securities, asset-backed securities, corporate bonds and municipal bonds), alternative strategies (including traditional mutual funds,
precious metals and commodities) and cash.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
177 Fifth Third Bancorp
The following table provides the Bancorp’s targeted and actual weighted-average asset allocations by asset category, with mutual and
exchange-traded funds incorporated according to their underlying investments, for the years ended December 31:
Targeted Range(a)
2024
2023
Fixed-income securities
50-100 %
95
90
Cash or cash equivalents
0-100
5
10
Total
100 %
100
(a)
These reflect the targeted ranges for the year ended December 31, 2024.
Plan Management’s objective is to achieve and maintain a fully-funded status of the qualified defined benefit plan while also minimizing the
risk of excess assets. As a result, the portfolio assets of the qualified defined benefit plan will continue to increase the weighting of long
duration fixed income, or liability matching assets, as the funded status increases. There were no significant concentrations of risk associated
with the investments of the Plan at December 31, 2024.
Permitted asset classes of the Plan include cash and cash equivalents, fixed-income (domestic and non-U.S. bonds), equities (U.S., non-U.S.,
emerging markets and real estate investment trusts), equipment leasing and mortgages. The Plan utilizes derivative instruments including
puts, calls, straddles or other option strategies, as approved by management.
Fifth Third Bank, National Association, as Trustee, is expected to manage Plan assets in a manner consistent with the Plan agreement and
other regulatory, federal and state laws. The Fifth Third Bank Pension, 401(k) and Medical Plan Committee (the “Committee”) is the plan
administrator. The Trustee is required to provide to the Committee monthly and quarterly reports covering a list of Plan assets, portfolio
performance, transactions and asset allocation. The Trustee is also required to keep the Committee apprised of any material changes in the
Trustee’s outlook and recommended investment policy. There were no fees paid by the Plan for investment management, accounting or
administrative services provided by the Trustee for the years ended December 31, 2024, 2023 and 2022.
Other Information on Retirement and Benefit Plans
The Bancorp has a qualified defined contribution savings plan that allows participants to make voluntary 401(k) contributions on a pre-tax or
Roth basis, subject to statutory limitations. Expenses recognized for matching contributions to the Bancorp’s qualified defined contribution
savings plan were $115 million, $114 million and $111 million for the years ended December 31, 2024, 2023 and 2022, respectively. The
Bancorp did not make profit sharing contributions during the years ended December 31, 2024, 2023 and 2022. In addition, the Bancorp has a
non-qualified defined contribution plan that allows certain employees to make voluntary contributions into a deferred compensation plan.
Expenses recognized by the Bancorp for its non-qualified defined contribution plan were $5 million, $5 million and $7 million for the years
ended December 31, 2024, 2023 and 2022, respectively.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
178 Fifth Third Bancorp
23. Accumulated Other Comprehensive Income
The tables below present the activity of the components of OCI and AOCI for the years ended December 31:
Total OCI
Total AOCI
2024 ($ in millions)
Pre-tax
Activity
Tax
Effect
Net
Activity
Beginning
Balance
Net
Activity
Ending
Balance
Unrealized holding gains on available-for-sale debt securities
arising during the year
$
27
(12)
15
Unrealized losses on available-for-sale debt securities transferred to
held-to-maturity securities
994
(209)
785
Reclassification adjustment for net losses on available-for-sale debt
securities included in net income
18
(4)
14
Net unrealized losses on available-for-sale debt securities
1,039
(225)
814
(4,094)
814
(3,280)
Unrealized losses on available-for-sale debt securities transferred to
held-to-maturity securities
(994)
209
(785)
Amortization of unrealized losses on available-for-sale debt
securities transferred to held-to-maturity securities included in
net income
129
(28)
101
Net unrealized losses on available-for-sale debt securities
transferred to held-to-maturity securities
(865)
181
(684)
—
(684)
(684)
Unrealized holding losses on cash flow hedge derivatives arising
during the year
(724)
172
(552)
Reclassification adjustment for net losses on cash flow hedge
derivatives included in net income
351
(81)
270
Net unrealized losses on cash flow hedge derivatives
(373)
91
(282)
(372)
(282)
(654)
Net actuarial loss arising during the year
(2)
—
(2)
Reclassification of amounts to net periodic benefit costs
3
—
3
Defined benefit pension plans, net
1
—
1
(17)
1
(16)
Other
2
—
2
(4)
2
(2)
Total
$
(196)
47
(149)
(4,487)
(149)
(4,636)
Total OCI
Total AOCI
2023 ($ in millions)
Pre-tax
Activity
Tax
Effect
Net
Activity
Beginning
Balance
Net
Activity
Ending
Balance
Unrealized holding gains on available-for-sale debt securities
arising during the year
$
656
(162)
494
Reclassification adjustment for net losses on available-for-sale debt
securities included in net income
1
—
1
Net unrealized losses on available-for-sale debt securities
657
(162)
495
(4,589)
495
(4,094)
Unrealized holding losses on cash flow hedge derivatives arising
during the year
(171)
40
(131)
Reclassification adjustment for net losses on cash flow hedge
derivatives included in net income
334
(77)
257
Net unrealized losses on cash flow hedge derivatives
163
(37)
126
(498)
126
(372)
Net actuarial loss arising during the year
(1)
—
(1)
Reclassification of amounts to net periodic benefit costs
4
(1)
3
Defined benefit pension plans, net
3
(1)
2
(19)
2
(17)
Other
—
—
—
(4)
—
(4)
Total
$
823
(200)
623
(5,110)
623
(4,487)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
179 Fifth Third Bancorp
Total OCI
Total AOCI
2022 ($ in millions)
Pre-tax
Activity
Tax
Effect
Net
Activity
Beginning
Balance
Net
Activity
Ending
Balance
Unrealized holding losses on available-for-sale debt securities
arising during the year
$
(7,194)
1,716
(5,478)
Reclassification adjustment for net gains on available-for-sale debt
securities included in net income
(2)
—
(2)
Net unrealized losses on available-for-sale debt securities
(7,196)
1,716
(5,480)
891
(5,480)
(4,589)
Unrealized holding losses on cash flow hedge derivatives arising
during the year
(1,006)
232
(774)
Reclassification adjustment for net gains on cash flow hedge
derivatives included in net income
(99)
22
(77)
Net unrealized losses on cash flow hedge derivatives
(1,105)
254
(851)
353
(851)
(498)
Net actuarial gain arising during the year
11
(2)
9
Reclassification of amounts to net periodic benefit costs
6
(1)
5
Defined benefit pension plans, net
17
(3)
14
(33)
14
(19)
Other
—
—
—
(4)
—
(4)
Total
$
(8,284)
1,967
(6,317)
1,207
(6,317)
(5,110)
The table below presents reclassifications out of AOCI for the years ended December 31:
($ in millions)
Consolidated Statements of
Income Caption
2024
2023
2022
Net unrealized losses on available-for-sale debt securities:(a)
Net (losses) gains included in net income
Securities gains (losses), net
$
(18)
(1)
2
Income before income taxes
(18)
(1)
2
Applicable income tax expense
4
—
—
Net income
(14)
(1)
2
Net unrealized losses on available-for-sale debt securities
transferred to held-to-maturity securities:(a)
Net losses included in net income
Interest on securities
(129)
—
—
Income before income taxes
(129)
—
—
Applicable income tax expense
28
—
—
Net income
(101)
—
—
Net unrealized losses on cash flow hedge derivatives:(a)
Interest rate contracts related to C&I, commercial mortgage and
commercial construction loans
Interest and fees on loans and leases
(351)
(334)
99
Income before income taxes
(351)
(334)
99
Applicable income tax expense
81
77
(22)
Net income
(270)
(257)
77
Net periodic benefit costs:(a)
Amortization of net actuarial loss
Compensation and benefits(b)
(2)
(2)
(3)
Settlements
Compensation and benefits(b)
(1)
(2)
(3)
Income before income taxes
(3)
(4)
(6)
Applicable income tax expense
—
1
1
Net income
(3)
(3)
(5)
Other:(a)
Net losses included in net income
Other noninterest expense
(2)
—
—
Income before income taxes
(2)
—
—
Applicable income tax expense
—
—
—
Net income
(2)
—
—
Total reclassifications for the period
Net income
$
(390)
(261)
74
(a)
Amounts in parentheses indicate reductions to net income.
(b)
This AOCI component is included in the computation of net periodic benefit cost. Refer to Note 22 for information on the computation of net periodic benefit cost.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
180 Fifth Third Bancorp
24. Common, Preferred and Treasury Stock
The table presents a summary of the share activity within common, preferred and treasury stock for the years ended:
Common Stock
Preferred Stock
Treasury Stock
($ in millions, except share data)
Value
Shares
Value
Shares
Value
Shares
December 31, 2021
$
2,051 923,892,581 $
2,116
278,000 $
(7,024) 241,114,917
Shares acquired for treasury
—
—
—
—
(100)
3,079,462
Impact of stock transactions under stock
compensation plans, net
—
—
—
—
21
(3,687,834)
Other
—
—
—
—
—
156
December 31, 2022
$
2,051 923,892,581 $
2,116
278,000 $
(7,103) 240,506,701
Shares acquired for treasury
—
—
—
—
(201)
5,589,996
Impact of stock transactions under stock
compensation plans, net
—
—
—
—
42
(3,328,926)
December 31, 2023
$
2,051 923,892,581 $
2,116
278,000 $
(7,262) 242,767,771
Shares acquired for treasury
—
—
—
—
(630)
15,043,170
Impact of stock transactions under stock
compensation plans, net
—
—
—
—
52
(3,772,190)
December 31, 2024
$
2,051 923,892,581 $
2,116
278,000 $
(7,840) 254,038,751
Preferred Stock—Series L
On July 30, 2020, the Bancorp issued in a registered public offering 350,000 depositary shares, representing 14,000 shares of 4.50% fixed-
rate reset non-cumulative perpetual preferred stock, Series L, for net proceeds of approximately $346 million. Each preferred share has a
$25,000 liquidation preference. The preferred stock accrues dividends on a non-cumulative basis at an annual rate of 4.50% through but
excluding September 30, 2025. From, and including, September 30, 2025 and for each dividend reset period thereafter, dividends will accrue
on the Series L preferred stock, on a non-cumulative basis, at a rate equal to the five-year U.S. Treasury rate as of the most recent reset
dividend determination date plus 4.215%. Dividends will be payable, when, as and if declared by the Bancorp’s Board of Directors, quarterly
in arrears on each of March 31, June 30, September 30 and December 31, beginning on September 30, 2020. Subject to obtaining all required
regulatory approvals, on any dividend payment date on or after September 30, 2025, the Bancorp may redeem the Series L preferred stock
and the related depositary shares in whole or in part, at 100% of their liquidation preference, plus an amount equal to any declared and unpaid
dividends, without accumulation of any undeclared dividends. In addition, the Series L preferred stock and the related depositary shares may
be redeemed, subject to obtaining all required regulatory approvals, in whole but not in part, at any time, following the occurrence of a
regulatory capital event, at 100% of their liquidation preference, plus an amount equal to any declared and unpaid dividends, without
accumulation of any undeclared dividends. The Series L preferred shares are not convertible into Bancorp common shares or any other
securities.
Preferred Stock—Series K
On September 17, 2019, the Bancorp issued, in a registered public offering 10,000,000 depositary shares, representing 10,000 shares of
4.95% non-cumulative Series K perpetual preferred stock, for net proceeds of approximately $242 million. Each preferred share has a
$25,000 liquidation preference. Subject to any required regulatory approval, the Bancorp may redeem the Series K preferred shares at its
option in whole or in part, on any dividend payment date on or after September 30, 2024 and may redeem in whole, but not in part, at any
time following a regulatory capital event. The Series K preferred shares are not convertible into Bancorp common shares or any other
securities.
Preferred Stock—Class B, Series A
On August 26, 2019, the Bancorp issued 200,000 shares of 6.00% non-cumulative perpetual Class B preferred stock, Series A. Each preferred
share has a $1,000 liquidation preference. These shares were issued to the holders of MB Financial, Inc.’s 6.00% non-cumulative perpetual
preferred stock, Series C, in conjunction with the merger of MB Financial, Inc. with and into Fifth Third Bancorp. The newly issued shares of
Class B preferred stock, Series A were recognized by the Bancorp at the carrying value previously assigned to the MB Financial, Inc. Series
C preferred stock prior to the transaction. Subject to any required regulatory approval, the Bancorp may redeem the shares of Class B
preferred stock, Series A at its option, in whole or in part, at any time on any dividend payment due date and may redeem, in whole but not in
part, within 90 days following a regulatory capital treatment event.
Preferred Stock—Series J
On June 5, 2014, the Bancorp issued, in a registered public offering, 300,000 depositary shares, representing 12,000 shares of 4.90% fixed to
floating-rate non-cumulative Series J perpetual preferred stock, for net proceeds of $297 million. Each preferred share has a $25,000
liquidation preference. The preferred stock accrued dividends, on a non-cumulative semi-annual basis, at an annual rate of 4.90% through but
excluding September 30, 2019, at which time it converted to a quarterly floating-rate dividend of three-month LIBOR plus 3.129%. Pursuant
to LIBOR transition, it later converted from a reference rate of three-month LIBOR to a reference rate of three-month CME Term SOFR on
September 30, 2023. Following this conversion, the quarterly floating-rate dividend is three-month CME Term SOFR plus 3.129% plus the
tenor spread adjustment of 0.26161%. Subject to any required regulatory approval, the Bancorp may redeem the Series J preferred shares at
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
181 Fifth Third Bancorp
its option, in whole or in part, at any time. The Series J preferred shares are not convertible into Bancorp common shares or any other
securities.
Preferred Stock—Series I
On December 9, 2013, the Bancorp issued, in a registered public offering, 18,000,000 depositary shares, representing 18,000 shares of
6.625% fixed to floating-rate non-cumulative Series I perpetual preferred stock, for net proceeds of $441 million. Each preferred share has a
$25,000 liquidation preference. The preferred stock accrued dividends, on a non-cumulative quarterly basis, at an annual rate of 6.625%
through but excluding December 31, 2023, at which time it converted to a quarterly floating-rate dividend of three-month CME Term SOFR
plus 3.71% plus the tenor spread adjustment of 0.26161%. Subject to any required regulatory approval, the Bancorp may redeem the Series I
preferred shares at its option in whole or in part, at any time. The Series I preferred shares are not convertible into Bancorp common shares or
any other securities.
Preferred Stock—Series H
On May 16, 2013, the Bancorp issued, in a registered public offering, 600,000 depositary shares, representing 24,000 shares of 5.10% fixed
to floating-rate non-cumulative Series H perpetual preferred stock, for net proceeds of $593 million. Each preferred share has a $25,000
liquidation preference. The preferred stock accrued dividends, on a non-cumulative semi-annual basis, at an annual rate of 5.10% through but
excluding June 30, 2023, at which time it converted to a quarterly floating-rate dividend of three-month LIBOR plus 3.033%. Pursuant to
LIBOR transition, it later converted from a reference rate of three-month LIBOR to a reference rate of three-month CME Term SOFR on
September 30, 2023. Following this conversion, the quarterly floating-rate dividend is three-month CME Term SOFR plus 3.033% plus the
tenor spread adjustment of 0.26161%. Subject to any required regulatory approval, the Bancorp may redeem the Series H preferred shares at
its option in whole or in part, at any time. The Series H preferred shares are not convertible into Bancorp common shares or any other
securities.
Treasury Stock
In June of 2019, the Board of Directors authorized the Bancorp to repurchase up to 100 million common shares in the open market or in
privately negotiated transactions and to utilize any derivative or similar instrument to effect share repurchase transactions.
Under this authorization, the Bancorp entered into and settled accelerated share repurchase transactions during the years ended December 31,
2024 and 2023. As part of these transactions, the Bancorp entered into forward contracts in which the final number of shares delivered at
settlement was based on a discount to the average daily volume-weighted average price of the Bancorp’s common stock during the respective
terms of each repurchase agreement. Each accelerated share repurchase was treated as two separate transactions: (i) the repurchase of treasury
shares on the repurchase date and (ii) a forward contract indexed to the Bancorp’s common stock.
The following table presents a summary of the Bancorp’s accelerated share repurchase transactions that were entered into and settled during
the years ended December 31, 2024 and 2023:
Repurchase Date
Amount
($ in millions)
Shares Repurchased on
Repurchase Date
Shares Received from
Forward Contract
Settlement
Total Shares
Repurchased
Final Settlement Date
January 24, 2023
200
4,911,875
678,121
5,589,996
March 6, 2023
June 12, 2024
125
3,011,621
496,767
3,508,388
June 27, 2024
July 23, 2024
200
4,160,548
713,340
4,873,888
August 5, 2024
October 22, 2024
300
5,879,640
781,254
6,660,894
December 18, 2024
The Bancorp increased the cost basis of shares repurchased during the years ended December 31, 2024 and 2023 by $5 million and $1
million, respectively, as a result of the excise tax on share repurchases.
For further information on a subsequent event related to treasury stock, refer to Note 32.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
182 Fifth Third Bancorp
25. Stock-Based Compensation
Stock-based awards are eligible for issuance under the Bancorp’s Incentive Compensation Plan to executives, directors and key employees of
the Bancorp and its subsidiaries. The 2024 Incentive Compensation Plan was approved by shareholders on April 16, 2024 and authorized the
issuance of up to 55 million shares as equity compensation. The plan authorizes the issuance of SARs, RSAs, RSUs, stock options,
performance share or unit awards, dividend or dividend equivalent rights and stock awards. As of December 31, 2024, there were 54.5
million shares available for future issuance. Based on total stock-based awards outstanding (including SARs, RSUs, stock options and PSAs)
and shares remaining for future grants under the 2024 Incentive Compensation Plan, the potential dilution to which the Bancorp’s common
shareholders are exposed due to the potential that stock-based compensation will be awarded to executives, directors or key employees of the
Bancorp and its subsidiaries is 11%. SARs, RSUs, stock options and PSAs outstanding represent 2% of the Bancorp’s issued shares at
December 31, 2024.
All of the Bancorp’s stock-based awards are to be settled with stock. The Bancorp has historically used treasury stock to settle stock-based
awards, when available. SARs, issued at fair value based on the closing price of the Bancorp’s common stock on the date of grant, have terms
up to ten years and vest and typically become exercisable ratably over a three year period of continued employment. The Bancorp does not
grant discounted SARs or stock options, re-price previously granted SARs or stock options or grant reload stock options. RSUs are typically
released after three or four years or ratably over three or four years of continued employment and receive dividend equivalents. Dividend
equivalents are accrued and paid in cash when the underlying shares are distributed, except for certain RSUs which have the rights to receive
dividend equivalents paid in cash at each dividend payment date. Stock options were previously issued at fair value based on the closing price
of the Bancorp’s common stock on the date of grant, had up to ten year terms and vested and became fully exercisable ratably over a three or
four-year period of continued employment. For PSAs that are eligible to receive dividend equivalents, the accrued cash dividends are adjusted
by the payout percentage achieved on the underlying awards. PSAs have three-year cliff vesting terms with performance conditions as
defined by the plan. All of the Bancorp’s executive stock-based awards contain an annual performance hurdle of 2% return on tangible
common equity. If this threshold is not met in any one of the three years during the performance period, one-third of PSAs are forfeited.
Additionally, if this threshold is not met, all SARs and RSUs that would vest in the next year may also be forfeited at the discretion of the
Human Capital and Compensation Committee of the Board of Directors. The Bancorp met this threshold as of December 31, 2024.
Stock-based compensation expense was $164 million, $169 million and $165 million for the years ended December 31, 2024, 2023 and 2022,
respectively, and is included in compensation and benefits expense in the Consolidated Statements of Income. The total related income tax
benefit recognized was $34 million, $35 million and $34 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Stock Appreciation Rights
The Bancorp uses assumptions, which are evaluated and revised as necessary, in estimating the grant-date fair value of each SAR grant.
The weighted-average assumptions were as follows for the years ended December 31:
2024
2023
2022
Expected life (in years)
7
7
7
Expected volatility
33 %
31
31
Expected dividend yield
4.2
3.6
3.4
Risk-free interest rate
4.1
3.8
2.7
The expected life is generally derived from historical exercise patterns and represents the amount of time that SARs granted are expected to
be outstanding. The expected volatility is based on a combination of historical and implied volatilities of the Bancorp’s common stock. The
expected dividend yield is based on annual dividends divided by the Bancorp’s stock price. Annual dividends are based on projected
dividends, estimated using an expected long-term dividend payout ratio, over the estimated life of the awards. The risk-free interest rate for
periods within the contractual life of the SARs is based on the U.S. Treasury yield curve in effect at the time of grant.
The grant-date fair value of SARs is measured using the Black-Scholes option-pricing model. The weighted-average grant-date fair value of
SARs granted was $9.71, $10.49 and $12.76 per share for the years ended December 31, 2024, 2023 and 2022, respectively. The total grant-
date fair value of SARs that vested during the years ended December 31, 2024, 2023 and 2022 was $3 million, $3 million and $2 million,
respectively.
At December 31, 2024, there was $2 million of stock-based compensation expense related to outstanding SARs not yet recognized. The
expense is expected to be recognized over an estimated remaining weighted-average period at December 31, 2024 of 1.8 years.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
183 Fifth Third Bancorp
The following table summarizes SARs activity for the years ended December 31:
2024
2023
2022
SARs (in thousands, except per share data)
Number of
SARs
Weighted-
Average Grant
Price Per Share
Number of
SARs
Weighted-
Average Grant
Price Per Share
Number of
SARs
Weighted-
Average Grant
Price Per Share
Outstanding at January 1
7,331 $
23.72
9,112 $
22.22
11,185 $
20.47
Granted
316
33.51
253
37.19
304
46.96
Exercised
(3,010)
20.01
(2,011)
18.42
(2,358)
17.05
Forfeited or expired
(1)
19.01
(23)
40.36
(19)
30.43
Outstanding at December 31
4,636 $
26.80
7,331 $
23.72
9,112 $
22.22
Exercisable at December 31
4,063 $
25.39
6,796 $
22.44
8,487 $
20.97
The following table summarizes outstanding and exercisable SARs by grant price per share at December 31, 2024:
Outstanding SARs
Exercisable SARs
SARs (in thousands, except per share data)
Number of
SARs
Weighted-
Average Grant
Price Per Share
Weighted-
Average Remaining
Contractual Life
(in years)
Number of
SARs
Weighted-
Average Grant
Price Per Share
Weighted-
Average Remaining
Contractual Life
(in years)
$10.01-$20.00
1,673 $
18.28
0.9
1,673 $
18.28
0.9
$20.01-$30.00
1,615
27.10
3.0
1,615
27.10
3.0
$30.01-$40.00
1,105
34.27
7.0
612
33.90
5.5
Over $40.00
243
49.51
7.1
163
49.51
7.1
All SARs
4,636 $
26.80
3.4
4,063 $
25.39
2.7
Restricted Stock Units
The total grant-date fair value of RSUs that were released during the years ended December 31, 2024, 2023 and 2022 was $141 million, $130
million and $110 million, respectively. At December 31, 2024, there was $168 million of stock-based compensation expense related to
outstanding RSUs not yet recognized. The expense is expected to be recognized over an estimated remaining weighted-average period at
December 31, 2024 of 2.3 years.
The following table summarizes RSUs activity for the years ended December 31:
2024
2023
2022
RSUs (in thousands, except per unit data)
Units
Weighted-
Average Grant-
Date Fair Value
Per Unit
Units
Weighted-
Average Grant-
Date Fair Value
Per Unit
Units
Weighted-
Average Grant-
Date Fair Value
Per Unit
Outstanding at January 1
10,365 $
37.63
9,906 $
38.04
9,487 $
30.67
Granted
4,546
33.87
4,763
34.94
4,682
47.11
Released
(3,751)
37.54
(3,696)
35.04
(3,608)
30.54
Forfeited
(396)
36.37
(608)
38.75
(655)
37.12
Outstanding at December 31
10,764 $
36.12
10,365 $
37.63
9,906 $
38.04
The following table summarizes outstanding RSUs by grant-date fair value per unit at December 31, 2024:
Outstanding RSUs
RSUs (in thousands)
Units
Weighted-
Average Remaining
Contractual Life
(in years)
Under $25.00
554
0.4
$25.01-$30.00
403
0.8
$30.01-$35.00
4,940
1.4
$35.01-$40.00
3,160
1.2
$40.01-$45.00
124
1.6
$45.01 and over
1,583
0.6
All RSUs
10,764
1.1
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
184 Fifth Third Bancorp
Stock Options
There were no stock options granted during the years ended December 31, 2024, 2023 and 2022. The Bancorp generally utilizes the Black-
Scholes option pricing model to measure the fair value of stock option grants.
The total intrinsic value of stock options exercised was $2 million, $1 million and $2 million for the years ended December 31, 2024, 2023
and 2022, respectively. Cash received from stock options exercised was $2 million, $1 million and $1 million for the years ended
December 31, 2024, 2023 and 2022, respectively. No stock options vested during the years ended December 31, 2024 and 2023 and an
immaterial amount of stock options vested during the year ended December 31, 2022. As of December 31, 2024, the aggregate intrinsic value
of both outstanding stock options and exercisable stock options was $2 million.
The following table summarizes stock options activity for the years ended December 31:
2024
2023
2022
Stock Options (in thousands, except per share data)
Number of
Options
Weighted-
Average
Exercise Price
Per Share
Number of
Options
Weighted-
Average
Exercise Price
Per Share
Number of
Options
Weighted-
Average
Exercise Price
Per Share
Outstanding at January 1
224 $
21.45
312 $
21.65
409 $
21.51
Exercised
(129)
21.03
(86)
21.97
(97)
21.06
Forfeited or expired
—
—
(2)
27.71
—
—
Outstanding at December 31
95 $
22.03
224 $
21.45
312 $
21.65
Exercisable at December 31
95 $
22.03
224 $
21.45
312 $
21.65
The following table summarizes outstanding and exercisable stock options by exercise price per share at December 31, 2024:
Outstanding Stock Options
Exercisable Stock Options
Stock Options (in thousands, except per
share data)
Number of
Options
Weighted-
Exercise Price
Per Share
Weighted-
Average
Remaining
Contractual Life
(in years)
Number of
Options
Weighted-
Exercise Price
Per Share
Weighted-
Average
Remaining
Contractual Life
(in years)
$10.01-$20.00
50
18.58
0.8
50
18.58
0.8
$20.01-$30.00
45
25.86
2.8
45
25.86
2.8
All stock options
95 $
22.03
1.8
95 $
22.03
1.8
Other Stock-Based Compensation
PSAs are payable contingent upon the Bancorp achieving certain predefined performance targets over a three-year measurement period.
Depending on performance, between zero and 1.2 million shares may be released to settle the PSAs outstanding at December 31, 2024 once
the applicable performance periods are completed. Awards granted during the years ended December 31, 2024, 2023 and 2022 will be
entirely settled in stock. The performance targets are based on the Bancorp’s performance relative to a defined peer group. PSAs use a
performance-based metric based on return on average common equity in relation to peers. During the years ended December 31, 2024, 2023
and 2022, approximately 295 thousand, 256 thousand and 288 thousand PSAs, respectively, were granted by the Bancorp. These awards were
granted at a weighted-average grant-date fair value of $33.51, $37.19 and $47.03 per unit during the years ended December 31, 2024, 2023
and 2022, respectively. During the years ended December 31, 2024, 2023 and 2022, approximately 355 thousand, 395 thousand and 429
thousand PSAs, respectively, were distributed to participants. These awards were distributed with a total grant date fair value of $12 million,
$12 million and $11 million during the years ended December 31, 2024, 2023 and 2022, respectively.
The Bancorp sponsors an employee stock purchase plan that allows qualifying employees to purchase shares of the Bancorp’s common stock
with a 15% match. During the years ended December 31, 2024, 2023 and 2022, there were approximately 487 thousand, 768 thousand and
520 thousand shares, respectively, purchased by participants. The Bancorp recognized expense of $2 million in each of the years ended
December 31, 2024, 2023 and 2022 related to this plan. This expense is included in compensation and benefits expense in the Consolidated
Statements of Income. On April 16, 2024, the Bancorp’s shareholders approved the 2024 Employee Stock Purchase Plan. This plan allowed
for the purchase of up to 15 million shares and cancelled the remaining 1.8 million shares available for purchase under the predecessor plan.
Approximately 278 thousand shares purchased by participants during the year ended December 31, 2024 were under the Bancorp’s 2024
Employee Stock Purchase Plan, leaving approximately 14.7 million shares available for future issuance as of December 31, 2024.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
185 Fifth Third Bancorp
26. Other Noninterest Income and Other Noninterest Expense
The following table presents the major components of other noninterest income and other noninterest expense for the years ended December
31:
($ in millions)
2024
2023
2022
Other noninterest income:
BOLI income
$
66
61
64
Private equity investment income
35
44
70
Equity method investment income
18
52
22
Income from the TRA associated with Worldpay, Inc.
11
22
46
Gains (losses) on sales of businesses
7
—
(7)
Loss on swap associated with the sale of Visa, Inc. Class B Shares
(138)
(94)
(84)
Other, net
13
6
38
Total other noninterest income
$
12
91
149
Other noninterest expense:
FDIC insurance and other taxes
$
181
385
132
Leasing business expense
92
121
131
Losses and adjustments
86
91
91
Data processing
81
87
82
Dues and subscriptions
61
61
58
Travel
60
56
60
Securities recordkeeping
55
50
48
Professional service fees
49
53
54
Postal and courier
48
46
40
Cash and coin processing
47
48
44
Intangible amortization
35
43
47
Other, net
178
184
145
Total other noninterest expense
$
973
1,225
932
27. Earnings Per Share
The following table provides the calculation of earnings per share and the reconciliation of earnings per share and earnings per diluted share
for the years ended December 31:
($ in millions, except per share data)
2024
2023
2022
Net income available to common shareholders
$
2,155
2,212
2,330
Less: Income allocated to participating securities
—
—
2
Net income allocated to common shareholders
2,155
2,212
2,328
Average common shares outstanding - basic
682
684
689
Effect of dilutive stock-based awards
5
4
6
Average common shares outstanding - diluted
687
688
695
Earnings per share - basic
3.16
3.23
3.38
Earnings per share - diluted
3.14
3.22
3.35
Anti-dilutive stock-based awards excluded from diluted shares
1
6
3
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
186 Fifth Third Bancorp
28. Fair Value Measurements
The Bancorp measures certain financial assets and liabilities at fair value in accordance with U.S. GAAP, which defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. U.S. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels. For more information regarding the fair value hierarchy and how the Bancorp measures fair value, refer to Note 1.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables summarize assets and liabilities measured at fair value on a recurring basis as of:
Fair Value Measurements Using
December 31, 2024 ($ in millions)
Level 1
Level 2
Level 3
Total Fair Value
Assets:
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities
$
4,360
—
—
4,360
Obligations of states and political subdivisions securities
—
—
—
—
Mortgage-backed securities:
Agency residential mortgage-backed securities
—
5,681
—
5,681
Agency commercial mortgage-backed securities
—
20,832
—
20,832
Non-agency commercial mortgage-backed securities
—
4,167
—
4,167
Asset-backed securities and other debt securities
—
3,729
—
3,729
Available-for-sale debt and other securities(a)
4,360
34,409
—
38,769
Trading debt securities:
U.S. Treasury and federal agencies securities
591
35
—
626
Obligations of states and political subdivisions securities
—
120
—
120
Agency residential mortgage-backed securities
—
10
—
10
Asset-backed securities and other debt securities
—
429
—
429
Trading debt securities
591
594
—
1,185
Equity securities
307
34
—
341
Residential mortgage loans held for sale
—
574
—
574
Residential mortgage loans(b)
—
—
108
108
Servicing rights
—
—
1,704
1,704
Derivative assets:
Interest rate contracts
7
721
2
730
Foreign exchange contracts
—
1,167
—
1,167
Commodity contracts
75
500
—
575
Derivative assets(c)
82
2,388
2
2,472
Total assets
$
5,340
37,999
1,814
45,153
Liabilities:
Derivative liabilities:
Interest rate contracts
$
—
939
5
944
Foreign exchange contracts
—
1,120
—
1,120
Equity contracts
—
—
170
170
Commodity contracts
57
507
—
564
Derivative liabilities(d)
57
2,566
175
2,798
Short positions:
U.S. Treasury and federal agencies securities
139
—
—
139
Asset-backed securities and other debt securities
—
156
—
156
Equity securities
21
—
—
21
Short positions(d)
160
156
—
316
Total liabilities
$
217
2,722
175
3,114
(a)
Excludes FHLB, FRB and DTCC restricted stock holdings totaling $276, $500 and $2, respectively, at December 31, 2024.
(b)
Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.
(c)
Included in other assets in the Consolidated Balance Sheets.
(d)
Included in other liabilities in the Consolidated Balance Sheets.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
187 Fifth Third Bancorp
Fair Value Measurements Using
December 31, 2023 ($ in millions)
Level 1
Level 2
Level 3
Total Fair Value
Assets:
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities
$
4,336
—
—
4,336
Obligations of states and political subdivisions securities
—
2
—
2
Mortgage-backed securities:
Agency residential mortgage-backed securities
—
10,282
—
10,282
Agency commercial mortgage-backed securities
—
25,720
—
25,720
Non-agency commercial mortgage-backed securities
—
4,445
—
4,445
Asset-backed securities and other debt securities
—
4,912
—
4,912
Available-for-sale debt and other securities(a)
4,336
45,361
—
49,697
Trading debt securities:
U.S. Treasury and federal agencies securities
640
7
—
647
Obligations of states and political subdivisions securities
—
39
—
39
Agency residential mortgage-backed securities
—
6
—
6
Asset-backed securities and other debt securities
—
207
—
207
Trading debt securities
640
259
—
899
Equity securities
600
13
—
613
Residential mortgage loans held for sale
—
334
—
334
Residential mortgage loans(b)
—
—
116
116
Servicing rights
—
—
1,737
1,737
Derivative assets:
Interest rate contracts
—
977
6
983
Foreign exchange contracts
—
643
—
643
Commodity contracts
205
846
—
1,051
Derivative assets(c)
205
2,466
6
2,677
Total assets
$
5,781
48,433
1,859
56,073
Liabilities:
Derivative liabilities:
Interest rate contracts
$
5
1,202
6
1,213
Foreign exchange contracts
—
600
—
600
Equity contracts
—
—
168
168
Commodity contracts
28
990
—
1,018
Derivative liabilities(d)
33
2,792
174
2,999
Short positions:
U.S. Treasury and federal agencies securities
31
—
—
31
Asset-backed securities and other debt securities
—
76
—
76
Short positions(d)
31
76
—
107
Total liabilities
$
64
2,868
174
3,106
(a)
Excludes FHLB, FRB and DTCC restricted stock holdings totaling $224, $496 and $2, respectively, at December 31, 2023.
(b)
Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.
(c)
Included in other assets in the Consolidated Balance Sheets.
(d)
Included in other liabilities in the Consolidated Balance Sheets.
The following is a description of the valuation methodologies used for significant instruments measured at fair value, as well as the general
classification of such instruments pursuant to the valuation hierarchy.
Available-for-sale debt and other securities, trading debt securities and equity securities
Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities
include U.S. Treasury securities and equity securities. If quoted market prices are not available, then fair values are estimated using pricing
models which primarily utilize quoted prices of securities with similar characteristics. Level 2 securities may include federal agencies
securities, obligations of states and political subdivisions securities, agency residential mortgage-backed securities, agency and non-agency
commercial mortgage-backed securities, asset-backed securities and other debt securities and equity securities. These securities are generally
valued using a market approach based on observable prices of securities with similar characteristics.
Residential mortgage loans held for sale
For residential mortgage loans held for sale for which the fair value election has been made, fair value is estimated based upon mortgage-
backed securities prices and spreads to those prices or, for certain ARM loans, DCF models that may incorporate the anticipated portfolio
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
188 Fifth Third Bancorp
composition, credit spreads of asset-backed securities with similar collateral and market conditions. The anticipated portfolio composition
includes the effect of interest rate spreads and discount rates due to loan characteristics such as the state in which the loan was originated, the
loan amount and the ARM margin. Residential mortgage loans held for sale that are valued based on mortgage-backed securities prices are
classified within Level 2 of the valuation hierarchy as the valuation is based on external pricing for similar instruments. ARM loans classified
as held for sale are also classified within Level 2 of the valuation hierarchy due to the use of observable inputs in the DCF model. These
observable inputs include interest rate spreads from agency mortgage-backed securities market rates and observable discount rates.
Residential mortgage loans
For residential mortgage loans for which the fair value election has been made, and that are reclassified from held for sale to held for
investment, the fair value estimation is based on mortgage-backed securities prices, interest rate risk and an internally developed credit
component. Therefore, these loans are transferred from Level 2 to Level 3 of the valuation hierarchy. An adverse change in the loss rate or
severity assumption would result in a decrease in fair value of the related loans.
Servicing rights
MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions
typically are not readily available. Accordingly, the Bancorp estimates the fair value of MSRs using internal OAS models with certain
unobservable inputs, primarily prepayment speed assumptions, OAS and weighted-average lives, resulting in a classification within Level 3
of the valuation hierarchy. Refer to Note 13 for further information on the assumptions used in the valuation of the Bancorp’s MSRs.
Derivatives
Exchange-traded derivatives valued using quoted prices and certain over-the-counter derivatives valued using active bids are classified within
Level 1 of the valuation hierarchy. Most of the Bancorp’s derivative contracts are valued using DCF or other models that incorporate current
market interest rates, credit spreads assigned to the derivative counterparties and other market parameters and, therefore, are classified within
Level 2 of the valuation hierarchy. Such derivatives include basic and structured interest rate, foreign exchange and commodity swaps and
options. Derivatives that are valued based upon models with significant unobservable market parameters are classified within Level 3 of the
valuation hierarchy. At December 31, 2024 and 2023, derivatives classified as Level 3, which are valued using models containing
unobservable inputs, consisted primarily of a total return swap associated with the Bancorp’s sale of Visa, Inc. Class B Shares as well as
IRLCs, which utilize internally generated loan closing rate assumptions as a significant unobservable input in the valuation process.
Under the terms of the total return swap, the Bancorp will make or receive payments based on subsequent changes in the conversion rate of
the Visa, Inc. Class B Shares into Class A Shares. Additionally, the Bancorp will make a quarterly payment based on Visa’s stock price and
the conversion rate of the Visa, Inc. Class B Shares into Class A Shares until the date on which the Covered Litigation is settled. The fair
value of the total return swap was calculated using a DCF model based on unobservable inputs consisting of management’s estimate of the
probability of certain litigation scenarios, the timing of the resolution of the Covered Litigation and Visa litigation loss estimates in excess, or
shortfall, of the Bancorp’s proportional share of escrow funds.
An increase in the loss estimate or a delay in the resolution of the Covered Litigation would result in an increase in the fair value of the
derivative liability; conversely, a decrease in the loss estimate or an acceleration of the resolution of the Covered Litigation would result in a
decrease in the fair value of the derivative liability. Refer to Note 18 for additional information on the Covered Litigation.
The net asset fair value of the Bancorp’s IRLCs at December 31, 2024 was $2 million. Immediate decreases in current interest rates of 25 bps
and 50 bps would result in increases in the fair value of the IRLCs of approximately $2 million and $3 million, respectively. Immediate
increases in current interest rates of 25 bps and 50 bps would result in decreases in the fair value of the IRLCs of approximately $2 million
and $4 million, respectively. An immediate 10% or 20% change in loan closing rates, either adverse or favorable, would not have a material
impact on the fair value of IRLCs as of December 31, 2024. These sensitivities are hypothetical and should be used with caution, as changes
in fair value based on a variation in assumptions typically cannot be extrapolated because the relationship of the change in assumptions to the
change in fair value may not be linear.
Short positions
Where quoted prices are available in an active market, short positions are classified within Level 1 of the valuation hierarchy. Level 1
securities include U.S. Treasury securities and equity securities. If quoted market prices are not available, then fair values are estimated using
pricing models which primarily utilize quoted prices of securities with similar characteristics and therefore are classified within Level 2 of the
valuation hierarchy. Level 2 securities include asset-backed and other debt securities.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
189 Fifth Third Bancorp
The following tables are a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable
inputs (Level 3):
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the year ended December 31, 2024 ($ in millions)
Residential
Mortgage
Loans
Servicing
Rights
Interest Rate
Derivatives,
Net(a)
Equity
Derivatives
Total Fair
Value
Balance, beginning of period
$
116
1,737
—
(168)
1,685
Total (losses) gains (realized/unrealized):(b)
Included in earnings
(1)
(77)
41
(138)
(175)
Purchases/originations
—
49
(1)
—
48
Sales
—
(5)
—
—
(5)
Settlements
(11)
—
(43)
136
82
Transfers into Level 3(c)
4
—
—
—
4
Balance, end of period
$
108
1,704
(3)
(170)
1,639
The amount of total (losses) gains for the period
included in earnings attributable to the change in
unrealized gains or losses relating to instruments
still held at December 31, 2024
$
(1)
14
6
(138)
(119)
(a)
Net interest rate derivatives include derivative assets and liabilities of $2 and $5, respectively, as of December 31, 2024.
(b)
There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at December 31, 2024.
(c)
Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the year ended December 31, 2023 ($ in millions)
Residential
Mortgage
Loans
Servicing
Rights
Interest Rate
Derivatives,
Net(a)
Equity
Derivatives
Total Fair
Value
Balance, beginning of period
$
123
1,746
(1)
(195)
1,673
Total (losses) gains (realized/unrealized):(b)
Included in earnings
2
(105)
53
(94)
(144)
Purchases/originations
—
96
(3)
—
93
Settlements
(15)
—
(49)
121
57
Transfers into Level 3(c)
6
—
—
—
6
Balance, end of period
$
116
1,737
—
(168)
1,685
The amount of total (losses) gains for the period
included in earnings attributable to the change in
unrealized gains or losses relating to instruments
still held at December 31, 2023
$
2
(28)
5
(94)
(115)
(a)
Net interest rate derivatives include $6 for both derivative assets and liabilities as of December 31, 2023.
(b)
There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at December 31, 2023.
(c)
Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the year ended December 31, 2022 ($ in millions)
Residential
Mortgage
Loans
Servicing
Rights
Interest Rate
Derivatives,
Net(a)
Equity
Derivatives
Total Fair
Value
Balance, beginning of period
$
154
1,121
4
(214)
1,065
Total gains (losses) (realized/unrealized):(b)
Included in earnings
(18)
177
22
(84)
97
Purchases/originations
—
448
1
—
449
Settlements
(23)
—
(28)
103
52
Transfers into Level 3(c)
10
—
—
—
10
Balance, end of period
$
123
1,746
(1)
(195)
1,673
The amount of total gains (losses) for the period
included in earnings attributable to the change in
unrealized gains or losses relating to instruments
still held at December 31, 2022
$
(18)
311
6
(84)
215
(a)
Net interest rate derivatives include derivative assets and liabilities of $7 and $8, respectively, as of December 31, 2022.
(b)
There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at December 31, 2022.
(c)
Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
190 Fifth Third Bancorp
The total losses and gains included in earnings for assets and liabilities measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) were recorded in the Consolidated Statements of Income for the years ended December 31, 2024, 2023 and
2022 as follows:
($ in millions)
2024
2023
2022
Mortgage banking net revenue
$
(38)
(54)
177
Capital markets fees
2
4
4
Other noninterest income
(139)
(94)
(84)
Total (losses) gains
$
(175)
(144)
97
The total losses and gains included in earnings attributable to changes in unrealized gains and losses related to Level 3 assets and liabilities
still held at December 31, 2024, 2023 and 2022 were recorded in the Consolidated Statements of Income as follows:
($ in millions)
2024
2023
2022
Mortgage banking net revenue
$
18
(25)
295
Capital markets fees
2
4
4
Other noninterest income
(139)
(94)
(84)
Total (losses) gains
$
(119)
(115)
215
The following tables present information as of December 31, 2024 and 2023 about significant unobservable inputs related to the Bancorp’s
material categories of Level 3 financial assets and liabilities measured at fair value on a recurring basis:
As of December 31, 2024 ($ in millions)
Financial Instrument
Fair Value
Valuation
Technique
Significant Unobservable
Inputs
Range of Inputs
Weighted-Average
Residential mortgage loans
$
108 Loss rate model
Interest rate risk factor
(51.9) - 4.6%
(13.3) %
(a)
Credit risk factor
— - 0.5%
0.2 %
(a)
Servicing rights
1,704 DCF
Prepayment speed
— - 100.0%
(Fixed)
5.8 %
(b)
(Adjustable)
16.9 %
(b)
OAS (bps)
420 - 1,823
(Fixed)
459
(b)
(Adjustable)
731
(b)
IRLCs, net
2 DCF
Loan closing rates
20.8 - 96.0%
83.5 %
(c)
Swap associated with the sale
of Visa, Inc. Class B Shares
(170) DCF
Timing of the resolution of
the Covered Litigation
Q2 2027 - Q1 2028
Q4 2027
(d)
(a)
Unobservable inputs were weighted by the relative carrying value of the instruments.
(b)
Unobservable inputs were weighted by the relative unpaid principal balance of the instruments.
(c)
Unobservable inputs were weighted by the relative notional amount of the instruments.
(d)
Unobservable inputs were weighted by the probability of the final funding date of the instruments.
As of December 31, 2023 ($ in millions)
Financial Instrument
Fair Value
Valuation
Technique
Significant Unobservable
Inputs
Range of Inputs
Weighted-Average
Residential mortgage loans
$
116 Loss rate model
Interest rate risk factor
(23.4) - 3.4%
(11.6) %
(a)
Credit risk factor
— - 0.6%
0.2 %
(a)
Servicing rights
1,737 DCF
Prepayment speed
— - 100.0%
(Fixed)
5.9 %
(b)
(Adjustable)
20.3 %
(b)
OAS (bps)
477 - 1,447
(Fixed)
569
(b)
(Adjustable)
1,016
(b)
IRLCs, net
5 DCF
Loan closing rates
20.9 - 96.0%
82.3 %
(c)
Swap associated with the sale
of Visa, Inc. Class B Shares
(168) DCF
Timing of the resolution of
the Covered Litigation
Q4 2024 - Q1 2027
Q4 2025
(d)
(a)
Unobservable inputs were weighted by the relative carrying value of the instruments
(b)
Unobservable inputs were weighted by the relative unpaid principal balance of the instruments.
(c)
Unobservable inputs were weighted by the relative notional amount of the instruments.
(d)
Unobservable inputs were weighted by the probability of the final funding date of the instruments.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on
an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
191 Fifth Third Bancorp
The following tables provide the fair value hierarchy and carrying amount of all assets that were held as of December 31, 2024 and 2023, and
for which a nonrecurring fair value adjustment was recorded during the years ended December 31, 2024 and 2023, and the related gains and
losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.
Fair Value Measurements Using
Total (Losses) Gains
As of December 31, 2024 ($ in millions)
Level 1
Level 2
Level 3
Total
For the year ended
December 31, 2024
Commercial loans held for sale
$
—
—
6
6
(1)
Commercial loans and leases
—
—
168
168
(245)
Consumer and residential mortgage loans
—
—
215
215
(17)
OREO
—
—
2
2
(2)
Bank premises and equipment
—
—
7
7
(1)
Private equity investments
—
3
—
3
11
Total
$
—
3
398
401
(255)
Fair Value Measurements Using
Total Losses
As of December 31, 2023 ($ in millions)
Level 1
Level 2
Level 3
Total
For the year ended
December 31, 2023
Commercial loans held for sale
$
—
—
1
1
—
Commercial loans and leases
—
—
163
163
(162)
Consumer and residential mortgage loans
—
—
189
189
(12)
OREO
—
—
18
18
(8)
Bank premises and equipment
—
—
15
15
(2)
Operating lease equipment
—
—
2
2
—
Private equity investments
—
—
—
—
(2)
Total
$
—
—
388
388
(186)
The following tables present information as of December 31, 2024 and 2023 about significant unobservable inputs related to the Bancorp’s
material categories of Level 3 financial assets and liabilities measured on a nonrecurring basis:
As of December 31, 2024 ($ in millions)
Financial Instrument
Fair Value
Valuation Technique
Significant Unobservable Inputs
Ranges of
Inputs
Weighted-
Average
Commercial loans held for sale
$
6 Comparable company analysis Market comparable transactions
NM
NM
Commercial loans and leases
168 Appraised value
Collateral value
NM
NM
Consumer and residential mortgage loans
215 Appraised value
Collateral value
NM
NM
OREO
2 Appraised value
Appraised value
NM
NM
Bank premises and equipment
7 Appraised value
Appraised value
NM
NM
As of December 31, 2023 ($ in millions)
Financial Instrument
Fair Value
Valuation Technique
Significant Unobservable Inputs
Ranges of
Inputs
Weighted-
Average
Commercial loans held for sale
$
1 Comparable company analysis Market comparable transactions
NM
NM
Commercial loans and leases
163 Appraised value
Collateral value
NM
NM
Consumer and residential mortgage loans
189 Appraised value
Collateral value
NM
NM
OREO
18 Appraised value
Appraised value
NM
NM
Bank premises and equipment
15 Appraised value
Appraised value
NM
NM
Operating lease equipment
2 Appraised value
Appraised value
NM
NM
Commercial loans held for sale
The Bancorp estimated the fair value of certain commercial loans held for sale during the years ended December 31, 2024 and 2023. These
valuations were primarily based on applying unobservable inputs such as an estimated market discount to the unpaid principal balance of the
loans (Level 3 of the valuation hierarchy).
Portfolio loans and leases
During the years ended December 31, 2024 and 2023, the Bancorp recorded nonrecurring adjustments to certain collateral-dependent
portfolio loans and leases. When a loan is collateral-dependent, the fair value of the loan is generally based on the fair value less cost to sell
of the underlying collateral supporting the loan and therefore these loans were classified within Level 3 of the valuation hierarchy. In cases
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
192 Fifth Third Bancorp
where the amortized cost basis of the loan or lease exceeds the estimated net realizable value of the collateral, then an ALLL is recognized, or
a charge-off once the remaining amount is considered uncollectible.
OREO
During the years ended December 31, 2024 and 2023, the Bancorp recorded nonrecurring adjustments to certain commercial and residential
real estate properties and branch-related real estate no longer intended to be used for banking purposes classified as OREO and measured at
the lower of carrying amount or fair value. These nonrecurring losses were primarily due to declines in real estate values of the properties
upon the transfer, or subsequent to the transfer, to OREO. The fair value amounts are generally based on appraisals of the property values,
resulting in a classification within Level 3 of the valuation hierarchy. In cases where the carrying amount exceeds the fair value, less costs to
sell, an impairment loss is recognized.
Bank premises and equipment
The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their
carrying values may not be recoverable. These properties were written down to their lower of cost or market values. At least annually
thereafter, the Bancorp will review these properties for market fluctuations. The fair value amounts were generally based on appraisals of the
property values, resulting in a classification within Level 3 of the valuation hierarchy. For further information on bank premises and
equipment, refer to Note 7.
Private equity investments
The Bancorp accounts for its private equity investments using the measurement alternative to fair value, except for those accounted for under
the equity method of accounting. Under the measurement alternative, the Bancorp carries each investment at its cost basis minus impairment,
if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same
issuer. The Bancorp recognized gains of $11 million during the year ended December 31, 2024 and did not recognize gains during the year
ended December 31, 2023, resulting from observable price changes. The carrying value of the Bancorp’s private equity investments still held
as of December 31, 2024 includes a cumulative $20 million of positive adjustments as a result of observable price changes since January 1,
2018. Because these adjustments are based on observable transactions in inactive markets, they are classified in Level 2 of the fair value
hierarchy.
For private equity investments which are accounted for using the measurement alternative to fair value, the Bancorp qualitatively evaluates
each investment quarterly to determine if impairment may exist. If necessary, the Bancorp then measures impairment by estimating the value
of its investment and comparing that to the investment’s carrying value, whether or not the Bancorp considers the impairment to be
temporary. These valuations are typically developed using a DCF method, but other methods may be used if more appropriate for the
circumstances. These valuations are based on unobservable inputs and therefore are classified in Level 3 of the fair value hierarchy. The
Bancorp did not recognize impairment charges during the year ended December 31, 2024 and recognized $2 million of impairment charges
on its private equity investments for the year ended December 31, 2023. The carrying value of the Bancorp’s private equity investments still
held as of December 31, 2024 includes a cumulative $15 million of impairment charges recognized since adoption of the measurement
alternative to fair value on January 1, 2018.
Fair Value Option
The Bancorp elected to measure certain residential mortgage loans held for sale under the fair value option as allowed under U.S. GAAP.
Electing to measure residential mortgage loans held for sale at fair value reduces certain timing differences and better matches changes in the
value of these assets with changes in the value of derivatives used as economic hedges for these assets. Management’s intent to sell
residential mortgage loans classified as held for sale may change over time due to such factors as changes in the overall liquidity in markets
or changes in characteristics specific to certain loans held for sale. Consequently, these loans may be reclassified to loans held for investment
and maintained in the Bancorp’s loan portfolio. In such cases, the loans will continue to be measured at fair value.
Fair value changes recognized in earnings for residential mortgage loans held at December 31, 2024 and 2023 for which the fair value option
was elected, as well as the changes in fair value of the underlying IRLCs, included losses of $11 million and $6 million, respectively. These
changes are reported in mortgage banking net revenue in the Consolidated Statements of Income.
Valuation adjustments related to instrument-specific credit risk for residential mortgage loans measured at fair value negatively impacted the
fair value of those loans by an immaterial amount at both December 31, 2024 and 2023. Interest on loans measured at fair value is accrued as
it is earned using the effective interest method and is reported as interest income in the Consolidated Statements of Income.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
193 Fifth Third Bancorp
The following table summarizes the difference between the fair value and the unpaid principal balance for residential mortgage loans
measured at fair value as of:
($ in millions)
Aggregate
Fair Value
Aggregate Unpaid
Principal Balance
Difference
December 31, 2024
Residential mortgage loans measured at fair value
$
682
693
(11)
Past due loans of 30-89 days
1
1
—
Past due loans of 90 days or more
1
1
—
Nonaccrual loans
2
2
—
December 31, 2023
Residential mortgage loans measured at fair value
$
450
456
(6)
Past due loans of 30-89 days
1
1
—
Nonaccrual loans
2
2
—
Fair Value of Certain Financial Instruments
The following tables summarize the carrying amounts and estimated fair values for certain financial instruments, excluding financial
instruments measured at fair value on a recurring basis:
Net Carrying
Fair Value Measurements Using
Total
As of December 31, 2024 ($ in millions)
Amount
Level 1
Level 2
Level 3
Fair Value
Financial assets:
Cash and due from banks
$
3,014
3,014
—
—
3,014
Other short-term investments
17,120
17,120
—
—
17,120
Other securities
778
—
778
—
778
Held-to-maturity securities
11,278
2,344
8,619
2
10,965
Loans and leases held for sale
66
—
—
66
66
Portfolio loans and leases:
Commercial loans and leases
72,139
—
—
72,319
72,319
Consumer and residential mortgage loans
45,192
—
—
42,155
42,155
Total portfolio loans and leases, net
$
117,331
—
—
114,474
114,474
Financial liabilities:
Deposits
$
167,252
—
167,353
—
167,353
Federal funds purchased
204
204
—
—
204
Other short-term borrowings
4,450
—
4,459
—
4,459
Long-term debt
14,440
3,753
10,835
—
14,588
Net Carrying
Fair Value Measurements Using
Total
As of December 31, 2023 ($ in millions)
Amount
Level 1
Level 2
Level 3
Fair Value
Financial assets:
Cash and due from banks
$
3,142
3,142
—
—
3,142
Other short-term investments
22,082
22,082
—
—
22,082
Other securities
722
—
722
—
722
Held-to-maturity securities
2
—
—
2
2
Loans and leases held for sale
44
—
—
44
44
Portfolio loans and leases:
Commercial loans and leases
71,616
—
—
71,766
71,766
Consumer and residential mortgage loans
43,180
—
—
41,410
41,410
Total portfolio loans and leases, net
$
114,796
—
—
113,176
113,176
Financial liabilities:
Deposits
$
168,912
—
168,873
—
168,873
Federal funds purchased
193
193
—
—
193
Other short-term borrowings
2,861
—
2,872
—
2,872
Long-term debt
16,418
14,481
1,903
—
16,384
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
194 Fifth Third Bancorp
29. Regulatory Capital Requirements and Capital Ratios
The Board of Governors of the Federal Reserve System issued capital adequacy guidelines pursuant to which it assesses the adequacy of
capital in examining and supervising a BHC. These guidelines include quantitative measures that assign risk weightings to assets and off-
balance sheet items, define and set minimum regulatory capital requirements as well as the measure of “well-capitalized” status. Additionally,
the U.S. banking agencies issued similar guidelines for minimum regulatory capital requirements and “well-capitalized” measurements for
banking subsidiaries.
The following table summarizes the prescribed capital ratios for the Bancorp and its banking subsidiary.
Minimum
Well-Capitalized
CET1 capital:
Fifth Third Bancorp
4.50 %
N/A
Fifth Third Bank, National Association
4.50
6.50
Tier 1 risk-based capital:
Fifth Third Bancorp
6.00
6.00
Fifth Third Bank, National Association
6.00
8.00
Total risk-based capital:
Fifth Third Bancorp
8.00
10.00
Fifth Third Bank, National Association
8.00
10.00
Leverage:
Fifth Third Bancorp
4.00
N/A
Fifth Third Bank, National Association
4.00
5.00
Failure to meet the minimum capital requirements or falling below the “well-capitalized” measure can initiate certain actions by regulators
that could have a direct material effect on the Consolidated Financial Statements of the Bancorp. The Bancorp is subject to the stress capital
buffer requirement and must maintain capital ratios above its buffered minimum (regulatory minimum plus stress capital buffer) in order to
avoid certain limitations on capital distributions and discretionary bonuses to executive officers. The FRB uses the supervisory stress test to
determine the Bancorp’s stress capital buffer, subject to a floor of 2.5%. At December 31, 2024 and 2023, the Bancorp’s stress capital buffer
requirement was 3.2% and 2.5%, respectively. The Bancorp’s capital ratios have exceeded the stress capital buffer requirement for all periods
presented.
The Bancorp and its banking subsidiary, Fifth Third Bank, National Association, had CET1 capital, Tier 1 risk-based capital, Total risk-based
capital and Leverage ratios above the “well-capitalized” levels at both December 31, 2024 and 2023. To continue to qualify for financial
holding company status pursuant to the Gramm-Leach-Bliley Act of 1999, the Bancorp’s banking subsidiary must, among other things,
maintain “well-capitalized” capital ratios.
The following table presents capital and risk-based capital and leverage ratios for the Bancorp and its banking subsidiary at December 31:
2024
2023
($ in millions)
Amount
Ratio
Amount
Ratio
CET1 capital:
Fifth Third Bancorp
$
17,339
10.57 % $
16,800
10.29 %
Fifth Third Bank, National Association
20,943
12.86
20,147
12.42
Tier 1 risk-based capital:
Fifth Third Bancorp
19,455
11.86
18,916
11.59
Fifth Third Bank, National Association
20,943
12.86
20,147
12.42
Total risk-based capital:
Fifth Third Bancorp
22,746
13.86
22,400
13.72
Fifth Third Bank, National Association
23,116
14.19
22,463
13.85
Leverage:(a)
Fifth Third Bancorp
19,455
9.22
18,916
8.73
Fifth Third Bank, National Association
20,943
10.02
20,147
9.38
(a)
Quarterly average assets are a component of the Leverage ratio and for this purpose do not include goodwill and any other intangible assets and other
investments that the U.S. banking agencies determine should be deducted from Tier 1 capital.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
195 Fifth Third Bancorp
30. Parent Company Financial Statements
Condensed Statements of Income (Parent Company Only)
For the years ended December 31 ($ in millions)
2024
2023
2022
Income
Dividends from consolidated nonbank subsidiaries(a)
$
1,800
1,819
165
Securities gains (losses), net
3
4
(9)
Interest
85
63
11
Total income
1,888
1,886
167
Expenses
Interest
553
525
311
Other
27
39
19
Total expenses
580
564
330
Income (Loss) Before Income Taxes and Equity in Undistributed Earnings of Subsidiaries
1,308
1,322
(163)
Applicable income tax benefit
(115)
(112)
(76)
Income (Loss) Before Equity in Undistributed Earnings of Subsidiaries
1,423
1,434
(87)
Equity in undistributed earnings
891
915
2,533
Net Income
$
2,314
2,349
2,446
Other Comprehensive Income
—
—
—
Comprehensive Income
$
2,314
2,349
2,446
(a)
Includes dividends paid by the Bancorp’s indirect banking subsidiary to the Bancorp’s direct nonbank subsidiary holding company of $1.8 billion for both the
years ended December 31, 2024 and 2023. The Bancorp’s indirect banking subsidiary did not pay dividends during the year ended December 31, 2022.
Condensed Balance Sheets (Parent Company Only)
As of December 31 ($ in millions)
2024
2023
Assets
Cash
$
969
120
Other short-term investments
3,106
6,500
Available-for-sale debt and other securities
2,500
1,000
Equity securities
29
34
Loans to nonbank subsidiaries
5
—
Investment in nonbank subsidiaries
22,891
21,998
Goodwill
80
80
Other assets
156
179
Total Assets
$
29,736
29,911
Liabilities
Other short-term borrowings
$
3
—
Accrued expenses and other liabilities
567
631
Long-term debt (external)
9,521
10,108
Total Liabilities
$
10,091
10,739
Equity
Common stock
$
2,051
2,051
Preferred stock
2,116
2,116
Capital surplus
3,804
3,757
Retained earnings
24,150
22,997
Accumulated other comprehensive loss
(4,636)
(4,487)
Treasury stock
(7,840)
(7,262)
Total Equity
19,645
19,172
Total Liabilities and Equity
$
29,736
29,911
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
196 Fifth Third Bancorp
Condensed Statements of Cash Flows (Parent Company Only)
For the years ended December 31 ($ in millions)
2024
2023
2022
Operating Activities
Net income
$
2,314
2,349
2,446
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion
7
7
7
Provision for (benefit from) deferred income taxes
2
1
(3)
Securities (gains) losses, net
(3)
(4)
9
Equity in undistributed earnings
(891)
(915)
(2,533)
Net change in:
Equity securities
8
4
6
Other assets
(49)
147
(115)
Accrued expenses and other liabilities
(60)
(126)
45
Net Cash Provided by (Used in) Operating Activities
1,328
1,463
(138)
Investing Activities
Proceeds from maturities of securities issued by subsidiary
1,000
1,000
—
Purchase of securities issued by subsidiary
(2,500)
(1,000)
(1,000)
Net change in:
Other short-term investments
3,394
(833)
567
Loans to nonbank subsidiaries
(5)
60
132
Net Cash Provided by (Used in) Investing Activities
1,889
(773)
(301)
Financing Activities
Net change in other short-term borrowings
3
(121)
(240)
Proceeds from issuance of long-term debt
1,742
1,244
2,986
Repayment of long-term debt
(2,250)
(500)
(1,200)
Dividends paid on common and preferred stock
(1,176)
(1,060)
(927)
Repurchase of treasury stock and related forward contract
(625)
(200)
(100)
Other, net
(62)
(53)
(82)
Net Cash (Used in) Provided by Financing Activities
(2,368)
(690)
437
Increase (Decrease) in Cash
849
—
(2)
Cash at Beginning of Period
120
120
122
Cash at End of Period
$
969
120
120
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
197 Fifth Third Bancorp
31. Business Segments
The Bancorp has three reportable segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset
Management. The Bancorp’s reportable segments have been determined based on its management structure and management accounting
practices. This presentation is aligned with how results are reviewed internally by the Bancorp’s Chairman, Chief Executive Officer and
President, which the Bancorp has determined to be its Chief Operating Decision Maker (“CODM”). For each of the Bancorp’s segments, the
CODM primarily uses segment income before income taxes on an FTE basis to allocate resources such as employees and capital. The CODM
also monitors trends in net interest income, noninterest income and noninterest expense to evaluate the financial performance of each segment
and make resource allocation decisions. These decisions also consider segment-specific events and circumstances, general market conditions,
forecasts and variances to annual budgets. Additionally, the CODM uses segment average assets as a measure to allocate resources to the
segments.
The Bancorp manages interest rate risk centrally at the corporate level. By employing an FTP methodology, the segments are insulated from
most benchmark interest rate volatility, enabling them to focus on serving customers through the origination of loans and acceptance of
deposits. The FTP methodology assigns charge and credit rates to classes of assets and liabilities, respectively, based on the estimated amount
and timing of the cash flows for each transaction. Assigning the FTP rate based on matching the duration of cash flows allocates interest
income and interest expense to each segment so its resulting net interest income is insulated from future changes in benchmark interest rates.
The Bancorp’s FTP methodology also allocates the contribution to net interest income of the asset-generating and deposit-providing
businesses on a duration-adjusted basis to better attribute the driver of the performance. As the asset and liability durations are not perfectly
matched, the residual impact of the FTP methodology is captured in General Corporate and Other. The charge and credit rates are determined
using the FTP rate curve, which is based on an estimate of Fifth Third’s marginal borrowing cost in the wholesale funding markets. The FTP
curve is constructed using the U.S. swap curve, brokered CD pricing and unsecured debt pricing.
The Bancorp adjusts the FTP charge and credit rates as dictated by changes in interest rates for various interest-earning assets and interest-
bearing liabilities and by the review of behavioral assumptions, such as prepayment rates on interest-earning assets and the estimated
durations for indeterminate-lived deposits. Key assumptions, including the credit rates provided for deposit accounts, are reviewed annually.
Credit rates for deposit products and charge rates for loan products may be reset more frequently in response to changes in market conditions.
The Bancorp’s methodology for allocating provision for credit losses to the segments includes charges or benefits associated with changes in
criticized commercial loan levels in addition to actual net charge-offs experienced by the loans and leases owned by each segment. Provision
for credit losses attributable to loan and lease growth and changes in ALLL factors is captured in General Corporate and Other. The financial
results of the segments also include allocations for shared services and headquarters expenses, which are included within other noninterest
expense. Additionally, the segments form synergies by taking advantage of relationship depth opportunities and funding operations by
accessing the capital markets as a collective unit.
The following is a description of each of the Bancorp’s segments and the products and services they provide to their respective client bases.
Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and
government and professional customers. In addition to the traditional lending and depository offerings, Commercial Banking products and
services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-
based lending, real estate finance, public finance, commercial leasing and syndicated finance.
Consumer and Small Business Banking provides a full range of deposit and loan products to individuals and small businesses through a
network of full-service banking centers and relationships with indirect and correspondent loan originators in addition to providing products
designed to meet the specific needs of small businesses, including cash management services. Consumer and Small Business Banking
includes the Bancorp’s residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending, solar
energy installation and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of
residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Indirect lending activities include
extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine
dealers. Solar energy installation loans and certain other consumer loans are originated through a network of contractors and installers.
Wealth and Asset Management provides a full range of wealth management solutions for individuals, companies and not-for-profit
organizations, including wealth planning, investment management, banking, insurance, trust and estate services. These offerings include retail
brokerage services for individual clients, advisory services for institutional clients including middle market businesses, non-profits, states and
municipalities, and wealth management strategies and products for high net worth and ultra-high net worth clients.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
198 Fifth Third Bancorp
The following tables present the results of operations and assets by segment for the years ended December 31:
2024 ($ in millions)
Commercial
Banking
Consumer
and Small
Business
Banking
Wealth
and Asset
Management
General
Corporate
and Other(d)
Total
Net interest income (FTE)(a)
$
2,647
4,169
210
(1,372)
5,654
Provision for (benefit from) credit losses
304
322
—
(96)
530
Net interest income after provision for (benefit from) credit losses
$
2,343
3,847
210
(1,276)
5,124
Noninterest income:
Wealth and asset management revenue
$
3
247
397
—
647
Commercial payments revenue
529
76
1
2
608
Consumer banking revenue
—
551
2
2
555
Capital markets fees
421
2
2
(1)
424
Commercial banking revenue
373
4
—
—
377
Mortgage banking net revenue
—
210
1
—
211
Other noninterest income
53
4
1
(46)
12
Securities gains, net
1
—
—
14
15
Total noninterest income
$
1,380
1,094
404
(29)
2,849
Noninterest expense:
Compensation and benefits
$
656
882
222
1,003
2,763
Technology and communications
14
30
1
429
474
Net occupancy expense(b)
36
212
12
79
339
Equipment expense
28
51
—
74
153
Loan and lease expense
31
80
1
20
132
Marketing expense
3
68
1
43
115
Card and processing expense
9
75
1
(1)
84
Other noninterest expense(c)
1,117
1,074
149
(1,367)
973
Total noninterest expense
$
1,894
2,472
387
280
5,033
Income (loss) before income taxes (FTE)
$
1,829
2,469
227
(1,585)
2,940
Average assets
$
77,177
51,627
4,390
79,612
212,806
(a)
Includes FTE adjustments of $15 for Commercial Banking and $9 for General Corporate and Other.
(b)
Includes impairment losses and termination charges of $1 for ROU assets related to certain operating leases. For more information, refer to Note 9.
(c)
Includes segment expenses which are classified as other noninterest expense and allocations of corporate and shared services expenses.
(d)
General Corporate and Other is not a reportable segment and is presented for reconciliation purposes.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
199 Fifth Third Bancorp
2023 ($ in millions)
Commercial
Banking
Consumer
and Small
Business
Banking
Wealth
and Asset
Management
General
Corporate
and Other(e)
Total
Net interest income (FTE)(a)
$
3,828
5,207
360
(3,543)
5,852
Provision for credit losses
12
303
1
199
515
Net interest income after provision for credit losses
$
3,816
4,904
359
(3,742)
5,337
Noninterest income:
Wealth and asset management revenue
$
2
216
363
—
581
Commercial payments revenue
473
85
1
5
564
Consumer banking revenue
—
544
2
—
546
Capital markets fees
419
2
1
—
422
Commercial banking revenue
406
2
—
1
409
Mortgage banking net revenue
—
250
—
—
250
Other noninterest income(b)
65
6
2
18
91
Securities gains (losses), net
(9)
—
—
27
18
Total noninterest income
$
1,356
1,105
369
51
2,881
Noninterest expense:
Compensation and benefits
$
654
878
220
942
2,694
Technology and communications
14
27
1
422
464
Net occupancy expense(c)
41
209
12
69
331
Equipment expense
29
44
—
75
148
Loan and lease expense
30
86
1
16
133
Marketing expense
3
70
1
52
126
Card and processing expense
11
76
1
(4)
84
Other noninterest expense(d)
1,221
1,125
139
(1,260)
1,225
Total noninterest expense
$
2,003
2,515
375
312
5,205
Income (loss) before income taxes (FTE)
$
3,169
3,494
353
(4,003)
3,013
Average assets
$
83,078
50,974
4,678
69,696
208,426
(a)
Includes FTE adjustments of $16 for Commercial Banking and $9 for General Corporate and Other.
(b)
Includes impairment charges of $1 recorded in Consumer and Small Business Banking and $1 recorded in General Corporate and Other for bank premises and
equipment. For more information, refer to Note 7 and Note 28.
(c)
Includes impairment losses and termination charges of $2 for ROU assets related to certain operating leases. For more information, refer to Note 9.
(d)
Includes segment expenses which are classified as other noninterest expense and allocations of corporate and shared services expenses.
(e)
General Corporate and Other is not a reportable segment and is presented for reconciliation purposes.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
200 Fifth Third Bancorp
2022 ($ in millions)
Commercial
Banking
Consumer
and Small
Business
Banking
Wealth
and Asset
Management
General
Corporate
and Other(f)
Total
Net interest income (FTE)(a)
$
2,552
3,131
262
(320)
5,625
Provision for credit losses
33
139
—
391
563
Net interest income after provision for credit losses
$
2,519
2,992
262
(711)
5,062
Noninterest income:
Wealth and asset management revenue
$
3
204
363
—
570
Commercial payments revenue
468
89
1
10
568
Consumer banking revenue
—
538
2
2
542
Capital markets fees
387
2
—
(2)
387
Commercial banking revenue
417
(c)
1
1
—
419
Mortgage banking net revenue
—
214
1
—
215
Other noninterest income(b)
98
7
—
44
149
Securities losses, net
(33)
(2)
—
(49)
(84)
Total noninterest income
$
1,340
1,053
368
5
2,766
Noninterest expense:
Compensation and benefits
$
639
828
218
869
2,554
Technology and communications
11
22
1
382
416
Net occupancy expense(d)
40
196
13
58
307
Equipment expense
27
38
—
80
145
Loan and lease expense
27
107
1
32
167
Marketing expense
5
58
1
54
118
Card and processing expense
11
72
1
(4)
80
Other noninterest expense(e)
1,063
1,068
144
(1,343)
932
Total noninterest expense
$
1,823
2,389
379
128
4,719
Income (loss) before income taxes (FTE)
$
2,036
1,656
251
(834)
3,109
Average assets
$
82,239
49,823
4,763
70,104
206,929
(a)
Includes FTE adjustments of $10 for Commercial Banking and $6 for General Corporate and Other.
(b)
Includes impairment charges of $6 recorded in Consumer and Small Business Banking and $3 recorded in General Corporate and Other for bank premises and
equipment. For more information, refer to Note 7.
(c)
Includes impairment charges of $2 for operating lease equipment. For more information, refer to Note 8.
(d)
Includes impairment losses and termination charges of $2 for ROU assets related to certain operating leases. For more information, refer to Note 9.
(e)
Includes segment expenses which are classified as other noninterest expense and allocations of corporate and shared services expenses.
(f)
General Corporate and Other is not a reportable segment and is presented for reconciliation purposes.
32. Subsequent Events
On January 22, 2025, the Bancorp entered into an accelerated share repurchase transaction with a counterparty pursuant to which the Bancorp
paid $225 million on January 23, 2025 to repurchase shares of its outstanding common stock. The Bancorp is repurchasing the shares of its
common stock as part of its Board-approved 100 million share repurchase program previously announced on June 18, 2019. The Bancorp
expects the settlement of the transaction to occur on or before March 28, 2025.
On January 28, 2025, the Bank issued and sold, under its bank notes program, $700 million of fixed-rate/floating-rate senior notes due on
January 28, 2028. The senior notes will bear interest at a rate of 4.967% per annum to, but excluding, January 28, 2027. From, and including
January 28, 2027 until maturity, the senior notes will bear interest at a rate of compounded SOFR plus 0.81%. The senior notes are
redeemable at the Bank’s option, in whole, but not in part, one year prior to their maturity date, or in whole or in part beginning 30 days prior
to maturity, at par plus accrued and unpaid interest. Additionally, the senior notes are redeemable at the Bank’s option, in whole or in part,
beginning 180 days after the issue date and prior to January 28, 2027, at the greater of: (a) the aggregate principal amount of the senior notes
being redeemed, plus accrued and unpaid interest, or (b) the sum of the present value of the remaining scheduled payments of principal and
interest.
On January 28, 2025, the Bank issued and sold, under its bank notes program, $300 million of floating-rate senior notes due on January 28,
2028. The senior notes will bear interest at a rate of compounded SOFR plus 0.81%. These senior notes are redeemable at the Bank’s option,
in whole, but not in part, one year prior to their maturity date, or in whole or in part beginning 30 days prior to maturity, at par plus accrued
and unpaid interest.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
201 Fifth Third Bancorp
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Bancorp conducted an evaluation, under the supervision and with the participation of the Bancorp’s management, including the
Bancorp’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Bancorp’s disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on the foregoing, as
of the end of the period covered by this report, the Bancorp’s Chief Executive Officer and Chief Financial Officer concluded that the
Bancorp’s disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the
reports the Bancorp files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and
when required and information is accumulated and communicated to management including its Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
MANAGEMENT’S ASSESSMENT AS TO THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL
REPORTING
The management of Fifth Third Bancorp is responsible for establishing and maintaining adequate internal control, designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. The Bancorp’s management assessed the
effectiveness of the Bancorp’s internal control over financial reporting as of December 31, 2024. Management’s assessment is based on the
criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and was designed to provide reasonable assurance that the Bancorp maintained effective internal control over
financial reporting as of December 31, 2024. Based on this assessment, management believes that the Bancorp maintained effective internal
control over financial reporting as of December 31, 2024. The Bancorp’s independent registered public accounting firm, that audited the
Bancorp’s consolidated financial statements included in this annual report, has issued an audit report on our internal control over financial
reporting as of December 31, 2024. This report appears on page 203 of the annual report.
CHANGES IN INTERNAL CONTROLS
The Bancorp’s management also conducted an evaluation of internal control over financial reporting to determine whether any changes
occurred during the year covered by this report that have materially affected, or are reasonably likely to materially affect, the Bancorp’s
internal control over financial reporting. In the first quarter of 2024, the Bancorp implemented a new general ledger accounting system. The
new general ledger accounting system was implemented in order to standardize processes, improve efficiency and enhance management
reporting and analysis, and was subject to thorough testing and review both before and after final implementation. This implementation has
not materially affected, and the Bancorp does not expect it to materially affect, its internal control over financial reporting.
/s/ Timothy N. Spence
/s/ Bryan D. Preston
Timothy N. Spence
Bryan D. Preston
Chairman, Chief Executive Officer and President
Executive Vice President and Chief Financial Officer
February 24, 2025
February 24, 2025
Table of Contents
202 Fifth Third Bancorp
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Fifth Third Bancorp:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Fifth Third Bancorp and subsidiaries (the “Bancorp”) as of December 31,
2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Bancorp maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013)
issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated financial statements as of and for the year ended December 31, 2024, of the Bancorp and our report dated February 24, 2025
expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Bancorp’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s Assessment as to the Effectiveness of
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Bancorp’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to
the Bancorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
February 24, 2025
Table of Contents
203 Fifth Third Bancorp
ITEM 9B. OTHER INFORMATION
Adoption or Termination of Insider Trading Arrangements
On December 10, 2024, Jude A. Schramm, Executive Vice President and Chief Information Officer of the Bancorp, adopted a trading
arrangement for the sale of shares of stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of
Exchange Act Rule 10b5-1(c). Mr. Schramm’s Rule 10b5-1 Trading Plan, which shall terminate on December 31, 2025, provides for the sale
of up to 10,000 shares of common stock pursuant to the terms of the Rule 10b5-1 Trading Plan.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Bancorp has adopted an Enterprise Insider Trading and Ethical Investing Policy that applies to all of its directors and employees.
The information required by this item relating to the Executive Officers of the Registrant is included in PART I under “INFORMATION
ABOUT OUR EXECUTIVE OFFICERS.”
The information required by this item concerning Directors and the nomination process is incorporated herein by reference under the caption
“Election of Directors” of the Bancorp’s Proxy Statement for the 2025 Annual Meeting of Shareholders.
The information required by this item concerning the Audit Committee and Code of Business Conduct and Ethics is incorporated herein by
reference under the captions “Corporate Governance” and “Board of Directors, Committees, Meetings, and Functions” of the Bancorp’s
Proxy Statement for the 2025 Annual Meeting of Shareholders. Fifth Third’s Code of Business Conduct and Ethics is available on Fifth
Third’s corporate website at www.53.com. In addition, any future amendments to, or waivers from, a provision of the Fifth Third Code of
Business Conduct and Ethics that applies to Fifth Third’s directors or executive officers (including Fifth Third’s principal executive officer,
principal financial officer, and principal accounting officer or controller) will be posted at this internet address.
The information required by this item concerning Delinquent Section 16(a) Reports is incorporated herein by reference under the caption
“Delinquent Section 16(a) Reports” of the Bancorp’s Proxy Statement for the 2025 Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference under the captions “Compensation Discussion and Analysis,”
“Compensation of Named Executive Officers,” “Board of Directors Compensation,” “CEO Pay Ratio,” “Human Capital and Compensation
Committee Report” and “Compensation Committee Interlocks and Insider Participation” of the Bancorp’s Proxy Statement for the 2025
Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Security ownership information of certain beneficial owners and management is incorporated herein by reference under the captions “Certain
Beneficial Owners,” “Election of Directors,” “Compensation Discussion and Analysis,” “Board of Directors Compensation,” and
“Compensation of Named Executive Officers” of the Bancorp’s Proxy Statement for the 2025 Annual Meeting of Shareholders.
The information required by this item concerning Equity Compensation Plan information is included in Note 25 of the Notes to Consolidated
Financial Statements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference under the captions “Certain Transactions”, “Election of Directors”,
“Corporate Governance” and “Board of Directors, Committees, Meetings, and Functions” of the Bancorp’s Proxy Statement for the 2025
Annual Meeting of Shareholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated herein by reference under the caption “Principal Independent External Audit Firm Fees”
of the Bancorp’s Proxy Statement for the 2025 Annual Meeting of Shareholders. The Bancorp’s principal independent external audit firm is
Deloitte & Touche LLP, whose PCAOB Firm ID is 34.
Table of Contents
204 Fifth Third Bancorp
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Pages
Public Accounting Firm
106, 203
Fifth Third Bancorp and Subsidiaries Consolidated Financial Statements
108
Notes to Consolidated Financial Statements
113
The schedules for the Bancorp and its subsidiaries are omitted because of the absence of conditions under which they are required, or because
the information is set forth in the Consolidated Financial Statements or the notes thereto.
The following lists the Exhibits to the Annual Report on Form 10-K:
2.1
Agreement and Plan of Merger by and among Fifth Third Bancorp, Fifth Third Financial Corporation and MB Financial, Inc. dated as of May 20,
2018. Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 22, 2018.
3.1
Amended Articles of Incorporation of Fifth Third Bancorp. Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on
Form 10-Q filed with the SEC on May 7, 2021.
3.2
Code of Regulations of Fifth Third Bancorp, as Amended as of December 12, 2023. Incorporated by reference to Exhibit 3.2 to the Registrant’s
Current Report on Form 8-K filed with the SEC on December 18, 2023.
4.1
Indenture, dated as of May 23, 2003, between Fifth Third Bancorp and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 22, 2003.
4.2
First Supplemental Indenture, dated as of December 20, 2006, between Fifth Third Bancorp and Wilmington Trust Company, as Trustee.
Incorporated by reference to Exhibit 4.14 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
4.3
Global Security dated as of March 4, 2008 representing Fifth Third Bancorp’s $500,000,000 8.25% Subordinated Notes due 2038. Incorporated by
reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008. (1)
4.4
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and Wilmington Trust Company, as trustee.
Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 6, 2008.
4.5
First Supplemental Indenture dated as of January 25, 2011 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third and the Trustee. Incorporated by reference to Exhibit 4.2 to the
Registrant’s Current Report on Form 8-K filed with the SEC on January 25, 2011.
4.6
Second Supplemental Indenture dated as of March 7, 2012 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Wilmington Trust Company. Incorporated by
reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 7, 2012.
4.7
Deposit Agreement dated as of May 16, 2013, between Fifth Third Bancorp, as issuer, Wilmington Trust, National Association, as depositary and
calculation agent, American Stock Transfer & Trust Company, LLC, as transfer agent and registrar, and the holders from time to time of the
depositary receipts issued thereunder. Incorporated by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on
May 16, 2013.
4.8
Form of Certificate Representing the 5.10% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series H, of Fifth Third Bancorp.
Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 16, 2013.
4.9
Form of Depositary Receipt for the 5.10% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series H, of Fifth Third Bancorp.
Incorporated by reference as Exhibit A to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 16, 2013.
4.10
Global Security dated as of November 20, 2013 representing Fifth Third Bancorp’s $500,000,000 4.30% Subordinated Notes due 2024. Incorporated
by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 20, 2013. (2)
4.11
Deposit Agreement dated December 9, 2013, between Fifth Third Bancorp, as issuer, Wilmington Trust, National Association, as depositary and
calculation agent, American Stock Transfer & Trust Company, LLC as transfer agent and registrar, and the holders from time to time of the
depositary receipts issued thereunder. Incorporated by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on
December 9, 2013.
4.12
Form of Certificate Representing the 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I, of Fifth Third Bancorp.
Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 9, 2013.
4.13
Form of Depositary Receipt for the 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I, of Fifth Third Bancorp.
Incorporated by reference as Exhibit A to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 9, 2013.
4.14
Deposit Agreement dated June 5, 2014, among Fifth Third Bancorp, as issuer, Wilmington Trust, National Association, as depositary and
calculation agent, American Stock Transfer & Trust Company, LLC as transfer agent and registrar, and the holders from time to time of the
depositary receipts issued thereunder. Incorporated by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on
June 5, 2014.
4.15
Form of Certificate Representing the 4.90% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series J, of Fifth Third Bancorp.
Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2014.
4.16
Form of Depositary Receipt for the 4.90% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series J, of Fifth Third Bancorp.
Incorporated by reference as Exhibit A to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2014.
4.17
Third Supplemental Indenture dated as of February 28, 2014 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit
4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on February 28, 2014.
4.18
Fourth Supplemental Indenture dated as of July 27, 2015 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the Indenture
for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on July 27, 2015.
4.19
Fifth Supplemental Indenture dated as of June 15, 2017 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the Indenture
for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on June 15, 2017.
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205 Fifth Third Bancorp
4.20
Sixth Supplemental Indenture dated as of March 14, 2018 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 14, 2018.
4.21
Form of 3.950% Senior Notes due 2028. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC
on March 14, 2018.
4.22
Seventh Supplemental Indenture dated as of June 5, 2018 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the Indenture
for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2018.
4.23
Amendment dated as of August 31, 2018 to Seventh Supplemental Indenture dated as of June 5, 2018 between Fifth Third Bancorp and Wilmington
Trust Company, as Trustee, to the Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee.
Incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018.
4.24
Eighth Supplemental Indenture dated as of January 25, 2019 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 25, 2019.
4.25
Form of 3.650% Senior Notes due 2024. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC
on January 25, 2019.
4.26
Second Amended and Restated Deposit Agreement, dated as of August 26, 2019, among Fifth Third Bancorp, as issuer, and American Stock
Transfer & Trust Company, LLC, as depositary, transfer agent and registrar, and the holders from time to time of the depositary receipts issued.
Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-A filed with the SEC on August 26, 2019.
4.27
Form of depositary receipt representing the Depositary Shares (included as Exhibit A to Exhibit 4.26). Incorporated by reference to Exhibit 4.1 to
the Registrant’s Form 8-A filed with the SEC on August 26, 2019.
4.28
Deposit Agreement dated September 17, 2019, between Fifth Third Bancorp, as issuer, American Stock Transfer & Trust Company, LLC, as
depositary, transfer agent and registrar, relating to receipts, Depositary Shares and related 4.95% Non-Cumulative Perpetual Preferred Stock, Series
K. Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 17, 2019.
4.29
Form of Certificate Representing the 4.95% Non-Cumulative Perpetual Preferred Stock, Series K, of Fifth Third Bancorp. Incorporated by reference
to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 17, 2019.
4.30
Form of Depositary Receipt for the 4.95% Non-Cumulative Perpetual Preferred Stock, Series K, of Fifth Third Bancorp. Incorporated by reference
to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 17, 2019.
4.31
Ninth Supplemental Indenture dated as of October 28, 2019 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 28, 2019.
4.32
Form of 2.375% Senior Notes due 2025. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC
on October 28, 2019.
4.33
Tenth Supplemental Indenture dated as of May 5, 2020 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the Indenture
for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on May 5, 2020.
4.34
Form of 2.550% Senior Notes due 2027. Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the SEC
on May 5, 2020.
4.35
Form of Certificate Representing the 4.500% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series L, of Fifth Third Bancorp.
Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 30, 2020.
4.36
Deposit Agreement dated July 30, 2020, between Fifth Third Bancorp, as issuer, American Stock Transfer & Trust Company, LLC, as depositary,
transfer agent and registrar, and the holders from time to time of depositary receipts issued. Incorporated by reference to Exhibit 4.3 to the
Registrant’s Current Report on Form 8-K filed with the SEC on July 30, 2020.
4.37
Form of Depositary Receipt for the 4.500% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series L, of Fifth Third Bancorp.
Incorporated by reference to Exhibit A of Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 30, 2020.
4.38
Eleventh Supplemental Indenture dated as of November 1, 2021 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 1, 2021.
4.39
Form of 1.707% Fixed Rate/Floating Rate Senior Notes due 2027. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K filed with the SEC on November 1, 2021.
4.40
Twelfth Supplemental Indenture dated as of April 25, 2022 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 25, 2022.
4.41
Form of 4.055% Fixed Rate/Floating Rate Senior Notes due 2028. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K filed with the SEC on April 25, 2022.
4.42
Form of 4.337% Fixed Rate/Floating Rate Senior Notes due 2033. Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on
Form 8-K filed with the SEC on April 25, 2022.
4.43
Thirteenth Supplemental Indenture dated as of July 28, 2022 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee, as amended by Article 4 of the
Twelfth Supplemental Indenture dated April 25, 2022 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on July 28, 2022.
4.44
Form of 4.772% Fixed Rate/Floating Rate Senior Notes due 2030. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K filed with the SEC on July 28, 2022.
4.45
Fourteenth Supplemental Indenture dated as of October 27, 2022 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee, as amended by Article 4 of the
Twelfth Supplemental Indenture dated April 25, 2022 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on October 27, 2022.
4.46
Form of 6.361% Fixed Rate/Floating Rate Senior Notes due 2028. Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K filed with the SEC on October 27, 2022.
4.47
Fifteenth Supplemental Indenture dated as of July 27, 2023 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee, as amended by Article 4 of the
Twelfth Supplemental Indenture dated April 25, 2022 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 of the
Registrant’s Current Report on Form 8-K filed on July 27, 2023.
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206 Fifth Third Bancorp
4.48
Form of 6.339% Fixed Rate/Floating Rate Senior Notes due 2029. Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on
Form 8-K filed on July 27, 2023.
4.49
Sixteenth Supplemental Indenture dated as of January 29, 2024 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee, as amended by Article 4 of the
Twelfth Supplemental Indenture dated April 25, 2022 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 of the
Registrant’s Current Report on Form 8-K filed on January 29, 2024.
4.50
Form of 5.631% Fixed Rate/Floating Rate Senior Notes due 2032. Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on
Form 8-K filed on January 29, 2024.
4.51
Seventeenth Supplemental Indenture dated as of September 6, 2024 between Fifth Third Bancorp and Wilmington Trust Company, as Trustee, to the
Indenture for Senior Debt Securities dated as of April 30, 2008 between Fifth Third Bancorp and the Trustee, as amended by Article 4 of the
Twelfth Supplemental Indenture dated April 25, 2022 between Fifth Third Bancorp and the Trustee. Incorporated by reference to Exhibit 4.1 of the
Registrant’s Current Report on Form 8-K filed on September 6, 2024.
4.52
Form of 4.895% Fixed Rate/Floating Rate Senior Notes due 2030. Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on
Form 8-K filed on September 6, 2024.
4.53
Certain instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Item
601(b)(4)(iii) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
4.54
Description of Registrant’s Securities. Incorporated by reference to Exhibit 4.44 to the Registrant’s Annual Report on Form 10-K filed with the SEC
on February 25, 2022.
10.1
Fifth Third Bancorp Unfunded Deferred Compensation Plan for Non-Employee Directors (as amended and restated effective as of September 1,
2020). Incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2020.*
10.2
Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated effective January 1, 2020. Incorporated by reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.*
10.3
First Amendment to Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated.*
10.4
Second Amendment to Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated.*
10.5
Third Amendment to Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated.*
10.6
Fourth Amendment to Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated.*
10.7
Fifth Amendment to Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated.*
10.8
Sixth Amendment to Fifth Third Bancorp 401(k) Savings Plan, as Amended and Restated.*
10.9
Fifth Third Bancorp 2011 Incentive Compensation Plan. Incorporated by reference to Annex 1 to the Registrant’s Proxy Statement dated March 10,
2011.*
10.10
First Amendment to the Fifth Third Bancorp 2011 Incentive Compensation Plan. Incorporated by reference to Exhibit 10.24 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2018.*
10.11
Fifth Third Bancorp 2014 Incentive Compensation Plan. Incorporated by reference to Annex A to the Registrant’s Proxy Statement dated March 6,
2014.*
10.12
First Amendment to the Fifth Third Bancorp 2014 Incentive Compensation Plan. Incorporated by reference to Exhibit 10.26 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2018.*
10.13
Fifth Third Bancorp 2017 Incentive Compensation Plan. Incorporated by reference to Annex A to the Registrant’s Proxy Statement dated March 9,
2017.*
10.14
First Amendment to the Fifth Third Bancorp 2017 Incentive Compensation Plan. Incorporated by reference to Exhibit 10.28 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2018.*
10.15
Fifth Third Bancorp 2019 Incentive Compensation Plan. Incorporated by reference to Exhibit 4.3 to the Registrant’s Form S-8 Registration
Statement filed on April 16, 2019 (Registration Statement No. 333-230900).*
10.16
Fifth Third Bancorp 2021 Incentive Compensation Plan. Incorporated by reference to Annex A to the Registrant’s Proxy Statement filed on March
2, 2021.*
10.17
Fifth Third Bancorp 2024 Incentive Compensation Plan. Incorporated by reference to Annex A to the Registrant’s Proxy Statement filed on March
5, 2024.*
10.18
Fifth Third Bancorp Non-qualified Deferred Compensation Plan (as amended and restated effective as of September 1, 2020). Incorporated by
reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020.*
10.19
Fifth Third Bancorp Executive Change in Control Severance Plan, effective January 1, 2015. Incorporated by reference to Exhibit 10.1 to
Registrant’s Current Report on Form 8-K filed with the SEC on November 21, 2014.*
10.20
First Amendment to the Fifth Third Bancorp Executive Change in Control Severance Plan. Incorporated by reference to Exhibit 10.40 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.*
10.21
Second Amendment to the Fifth Third Bancorp Executive Change in Control Severance Plan. Incorporated by reference to Exhibit 99.2 of the
Registrant’s Current Report on Form 8-K filed on February 23, 2021.*
10.22
Fifth Third Bank, National Association Executive Severance Benefits Plan. Incorporated by reference to Exhibit 99.1 of the Registrant’s Current
Report on Form 8-K filed on February 23, 2021.*
10.23
Stock Appreciation Right Award Agreement. Incorporated by reference to Exhibit 10.34 of the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014.*
10.24
Restricted Stock Unit Agreement (for Directors). Incorporated by reference to Exhibit 10.36 of the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014.*
10.25
Master Confirmation, as supplemented by a Supplemental Confirmation, for accelerated share repurchase transaction dated July 29, 2015 between
Fifth Third Bancorp and Morgan Stanley & Co. LLC. Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 2015.**
10.26
Master Confirmation, as supplemented by a Supplemental Confirmation, for accelerated share repurchase transaction dated April 27, 2015 between
Fifth Third Bancorp and Barclays Bank PLC, through its agent Barclays Capital Inc. Incorporated by reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015.**
10.27
Master Confirmation, dated January 22, 2015, and Supplemental Confirmation, for accelerated share repurchase transaction dated January 22, 2015
between Fifth Third Bancorp and Wells Fargo Bank, National Association. Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2015.**
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207 Fifth Third Bancorp
10.28
Bancorp Director Pay Program. Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2024.*
10.29
2016 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.48 of the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2016.*
10.30
2017 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.49 of the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2016.*
10.31
Long-Term Incentive Award Overview February 2017 Grants. Incorporated by reference to Exhibit 10.52 of the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2016.*
10.32
Restricted Stock Unit Grant Agreement (for Directors) for Fifth Third Bancorp 2017 Incentive Compensation Plan. Incorporated by reference to
Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017.*
10.33
2018 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.67 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2017.*
10.34
Long-Term Incentive Award Overview 2018 Grants. Incorporated by reference to Exhibit 10.70 to the Registrant’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2017.*
10.35
2018 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2018.*
10.36
2018 Long-Term Incentive Compensation Program Overview February 2019 Grants. Incorporated by reference to Exhibit 10.74 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2018.*
10.37
2019 Performance Share Award Agreement. Incorporated by reference to Exhibit 10.75 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2018.*
10.38
2019 Restricted Stock Unit Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.76 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2018.*
10.39
2019 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.77 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2018.*
10.40
2019 Long-Term Incentive Compensation Program Overview February 2020 Grants. Incorporated by reference to Exhibit 10.72 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2019.*
10.41
2020 Performance Share Award Agreement. Incorporated by reference to Exhibit 10.73 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2019.*
10.42
2020 Restricted Stock Unit Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.74 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2019.*
10.43
2020 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.75 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2019.*
10.44
2019 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.76 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2019.*
10.45
2020 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2020.*
10.46
2020 Long-Term Incentive Compensation Program Overview February 2021 Grants. Incorporated by reference to Exhibit 10.63 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2020.*
10.47
2021 Performance Share Award Agreement. Incorporated by reference to Exhibit 10.64 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2020.*
10.48
2021 Restricted Stock Unit Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.65 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2020.*
10.49
2021 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.66 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2020.*
10.50
2021 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2021.*
10.51
2021 Long-Term Incentive Compensation Program Overview February 2022 Grants. Incorporated by reference to Exhibit 10.71 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2021.*
10.52
2022 Performance Share Award Agreement. Incorporated by reference to Exhibit 10.72 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2021.*
10.53
2022 Restricted Stock Unit Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.73 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2021.*
10.54
2022 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.74 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2021.*
10.55
2022 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2022.*
10.56
2022 Long-Term Incentive Compensation Program Overview February 2023 Grants. Incorporated by reference to Exhibit 10.66 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2022.*
10.57
2023 Performance Share Award Agreement. Incorporated by reference to Exhibit 10.67 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2022.*
10.58
2023 Restricted Stock Unit Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.68 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2022.*
10.59
2023 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.69 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2022.*
10.60
2023 Restricted Stock Unit Grant Agreement (for Directors). Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2023.*
10.61
Master Confirmation, as supplemented by two Supplemental Confirmations, for accelerated share repurchase transaction dated March 11, 2019
between Fifth Third Bancorp and JPMorgan Chase Bank, National Association, London Branch. Incorporated by reference to Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019.**
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208 Fifth Third Bancorp
10.62
Master Confirmation dated as of August 5, 2019, as supplemented by a Supplemental Confirmation dated August 5, 2019, for accelerated share
repurchase transaction between Fifth Third Bancorp and Citibank, N.A. Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2019.***
10.63
Master Confirmation dated September 30, 2024, for accelerated share repurchase transaction between Fifth Third Bancorp, Deutsche Bank AG,
London Branch and Deutsche Bank Securities Inc. Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2024.
10.64
Supplemental Confirmation dated October 21, 2024, to Master Confirmation dated July 29, 2015, for accelerated share repurchase transaction
between Fifth Third Bancorp and Morgan Stanley & Co. LLC.***
10.65
Master Confirmation dated December 13, 2024, for accelerated share repurchase transaction between Fifth Third Bancorp, Royal Bank of Canada
and RBC Capital Markets, LLC.
10.66
2023 Long-Term Incentive Compensation Program Overview February 2024 Grants. Incorporated by reference to Exhibit 10.72 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2023.*
10.67
2024 Performance Share Award Agreement. Incorporated by reference to Exhibit 10.73 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2023.*
10.68
2024 Restricted Stock Unit Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.74 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2023.*
10.69
2024 Stock Appreciation Right Award Agreement (for Executive Officers). Incorporated by reference to Exhibit 10.75 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2023.*
10.70
Form of 2024 Restricted Stock Unit Retention Agreement. Incorporated by reference to Exhibit 10.76 of the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2023.*
10.71
Form of 2024 Restricted Stock Unit Retention Agreement subject to additional covenant. Incorporated by reference to Exhibit 10.77 of the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.*
10.72
2024 Restricted Stock Unit Agreement (for Directors). Incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 2024. *
10.73
2024 Long-Term Incentive Compensation Program Overview February 2025 Grants.*
10.74
2025 Performance Share Award Agreement.*
10.75
2025 Restricted Stock Unit Agreement (for Executive Officers).*
19
Enterprise Insider Trading and Ethical Investing Policy.
21
Fifth Third Bancorp Subsidiaries, as of February 15, 2025.
23
Consent of Independent Registered Public Accounting Firm-Deloitte & Touche LLP.
31(i)
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
31(ii)
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
32(i)
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive
Officer.
32(ii)
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
99.1
Stipulated Final Judgement and Order filed July 9, 2024. Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K
filed on July 9, 2024.
99.2
Consent Order filed July 9, 2024, issued by the Consumer Financial Protection Bureau, including the Stipulation and Consent to the Issuance of a
Consent Order, dated July 5, 2024, by Fifth Third Bank, N.A. Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form
8-K filed on July 9, 2024.
97
Compensation Clawback and Disclosure Policy. Incorporated by reference to Exhibit 97 of the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2023.
101.INSXBRL
Instance Document.
101.SCHXBRL
Taxonomy Extension Schema Document.
101.CALXBRL
Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL
Taxonomy Extension Definition Linkbase Document.
101.LABXBRL
Taxonomy Extension Label Linkbase Document.
101.PREXBRL
Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
(1)
Fifth Third Bancorp also entered into an identical security on March 4, 2008 representing an additional $500,000,000 of its 8.25% Subordinated Notes due 2038.
(2)
Fifth Third Bancorp also entered into an identical security on November 20, 2013 representing an additional $250,000,000 in principal amount of its 4.30%
Subordinated Notes due 2024.
* Denotes management contract or compensatory plan or arrangement.
** An application for confidential treatment for selected portions of this exhibit has been filed with the SEC.
*** Selected portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K.
ITEM 16. FORM 10–K SUMMARY
None.
Table of Contents
209 Fifth Third Bancorp
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
FIFTH THIRD BANCORP
Registrant
/s/ Timothy N. Spence
Timothy N. Spence
Chairman, Chief Executive Officer and President
Principal Executive Officer
February 24, 2025
Pursuant to requirements of the Securities Exchange Act of 1934,
this report has been signed on February 24, 2025 by the
following persons on behalf of the Registrant and in the
capacities indicated.
OFFICERS:
/s/ Timothy N. Spence
Timothy N. Spence
Chairman, Chief Executive Officer and President
Principal Executive Officer
/s/ Bryan D. Preston
Bryan D. Preston
Executive Vice President and Chief Financial Officer
Principal Financial Officer
/s/ Jeffrey A. Lopper
Jeffrey A. Lopper
Senior Vice President and Chief Accounting Officer
Principal Accounting Officer
DIRECTORS:
/s/ Timothy N. Spence
Timothy N. Spence
Chairman
/s/ Nicholas K. Akins
Nicholas K. Akins
Lead Independent Director
/s/ B. Evan Bayh III
B. Evan Bayh III
/s/ Jorge L. Benitez
Jorge L. Benitez
/s/ Katherine B. Blackburn
Katherine B. Blackburn
/s/ Emerson L. Brumback
Emerson L. Brumback
/s/ Linda W. Clement-Holmes
Linda W. Clement-Holmes
/s/ C. Bryan Daniels
C. Bryan Daniels
/s/ Laurent Desmangles
Laurent Desmangles
/s/ Mitchell S. Feiger
Mitchell S. Feiger
/s/ Thomas H. Harvey
Thomas H. Harvey
/s/ Gary R. Heminger
Gary R. Heminger
/s/ Eileen A. Mallesch
Eileen A. Mallesch
/s/ Michael B. McCallister
Michael B. McCallister
/s/ Kathleen A. Rogers
Kathleen A. Rogers
/s/ Marsha C. Williams
Marsha C. Williams
Table of Contents
210 Fifth Third Bancorp
AVERAGE ASSETS FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS)
Interest-Earning Assets
Year
Loans and
Leases
Other Short-Term
Investments
Investment
Securities
Total
Cash and Due
from Banks
Other Assets
Total Average
Assets
2024
$
117,724
20,457
56,619
194,800
2,677
17,637
212,806
2023
122,282
11,934
57,527
191,743
2,772
16,169
208,426
2022
120,561
12,419
53,346
186,326
3,093
19,490
206,929
2021
114,117
33,243
37,018
184,378
3,055
21,050
206,324
2020
114,411
21,935
36,342
172,688
2,978
20,933
194,230
2019
107,794
2,140
35,470
145,404
2,748
16,903
163,936
2018
93,876
1,476
33,553
128,905
2,200
12,203
142,183
2017
92,731
1,390
32,172
126,293
2,224
13,236
140,527
2016
94,320
1,866
30,099
126,285
2,303
14,870
142,173
2015
93,339
3,258
26,987
123,584
2,608
15,100
139,999
AVERAGE DEPOSITS AND AVERAGE SHORT-TERM BORROWINGS FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS)
Deposits
Year
Demand
Interest
Checking
Savings
Money
Market
Certificates of
Deposit(a)
Foreign Office and
Other
Total
Short-Term
Borrowings(b)
Total
2024
$
40,314
58,599
17,594
36,165
14,606
158
167,436
3,231
170,667
2023
46,195
52,378
20,872
30,943
13,630
158
164,176
5,351
169,527
2022
60,185
45,835
23,445
29,326
4,030
170
162,991
4,925
167,916
2021
62,028
45,850
20,531
30,631
3,744
164
162,948
1,440
164,388
2020
47,111
46,890
16,440
29,879
7,455
256
148,031
2,094
150,125
2019
34,343
36,658
14,041
25,879
9,974
474
121,369
2,313
123,682
2018
32,634
29,818
13,330
21,769
6,532
839
104,922
3,120
108,042
2017
35,093
26,382
13,958
20,231
6,335
665
102,664
3,715
106,379
2016
35,862
25,143
14,346
19,523
6,745
830
102,449
3,351
105,800
2015
35,164
26,160
14,951
18,152
6,920
874
102,221
2,641
104,862
INCOME FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA)
Per Share
Year
Interest Income
Interest
Expense
Noninterest
Income
Noninterest
Expense
Net Income Available
to Common
Shareholders
Earnings
Diluted
Earnings
Dividends
Declared
2024
$
10,426
4,796
2,849
5,033
2,155
3.16
3.14
1.44
2023
9,760
3,933
2,881
5,205
2,212
3.23
3.22
1.36
2022
6,587
978
2,766
4,719
2,330
3.38
3.35
1.26
2021
5,211
441
3,118
4,748
2,659
3.78
3.73
1.14
2020
5,572
790
2,830
4,718
1,323
1.84
1.83
1.08
2019
6,254
1,457
3,536
4,660
2,419
3.38
3.33
0.94
2018
5,183
1,043
2,790
3,958
2,118
3.11
3.06
0.74
2017
4,489
691
3,224
3,782
2,105
2.86
2.81
0.60
2016
4,193
578
2,696
3,737
1,472
1.92
1.91
0.53
2015
4,028
495
3,003
3,643
1,610
2.00
1.97
0.52
MISCELLANEOUS AT DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA)
Equity
Year
Common Shares
Outstanding
Common
Stock
Preferred
Stock
Capital
Surplus
Retained
Earnings
Accumulated Other
Comprehensive
(Loss) Income
Treasury
Stock
Total
Book Value
Per Share
Allowance for
Loan and
Lease Losses
2024
669,853,830 $
2,051
2,116
3,804
24,150
(4,636)
(7,840) 19,645
26.17
2,352
2023
681,124,810
2,051
2,116
3,757
22,997
(4,487)
(7,262) 19,172
25.04
2,322
2022
683,385,880
2,051
2,116
3,684
21,689
(5,110)
(7,103) 17,327
22.26
2,194
2021
682,777,664
2,051
2,116
3,624
20,236
1,207
(7,024) 22,210
29.43
1,892
2020
712,760,325
2,051
2,116
3,635
18,384
2,601
(5,676) 23,111
29.46
2,453
2019
708,915,629
2,051
1,770
3,599
18,315
1,192
(5,724) 21,203
27.41
1,202
2018
646,630,857
2,051
1,331
2,873
16,578
(112)
(6,471) 16,250
23.07
1,103
2017
693,804,893
2,051
1,331
2,790
14,957
73
(5,002) 16,200
21.43
1,196
2016
750,479,299
2,051
1,331
2,756
13,290
59
(3,433) 16,054
19.62
1,253
2015
785,080,314
2,051
1,331
2,666
12,224
197
(2,764) 15,705
18.31
1,272
(a) Includes CDs $250,000 or less and CDs over $250,000.
(b) Includes federal funds purchased and other short-term borrowings.
Table of Contents
CONSOLIDATED TEN YEAR COMPARISON
211 Fifth Third Bancorp
FIFTH THIRD BANCORP DIRECTORS
FIFTH THIRD BANCORP OFFICERS
REGIONAL PRESIDENTS
Michael Ash
David Briggs
Timothy Elsbrock
Lee Fite
David Girodat
Stephanie Green
Kimberly Halbauer
Mark Heckler
Francie Henry
Randy Koporc
Matt Nipper
Tom Partridge
Cary Putrino
Thomas G. Welch, Jr.
Joseph Yurosek
FIFTH THIRD BANCORP BOARD
COMMITTEES
Audit Committee
Eileen A. Mallesch, Chair
B. Evan Bayh, III
Jorge L. Benitez
Linda W. Clement-Holmes
C. Bryan Daniels
Gary R. Heminger
Kathleen A. Rogers
Finance Committee
Gary R. Heminger, Chair
Nicholas K. Akins
Jorge L. Benitez
Mitchell S. Feiger
Thomas H. Harvey
Eileen A. Mallesch
Michael B. McCallister
Human Capital and Compensation
Committee
Michael B. McCallister, Chair
Nicholas K. Akins
Jorge L. Benitez
Linda W. Clement-Holmes
Gary R. Heminger
Marsha C. Williams
Nominating and Corporate
Governance Committee
Thomas H. Harvey, Chair
Nicholas K. Akins
Katherine B. Blackburn
Laurent Desmangles
Marsha C. Williams
Risk and Compliance Committee
Mitchell S. Feiger, Chair
Katherine B. Blackburn
Emerson L. Brumback
C. Bryan Daniels
Laurent Desmangles
Thomas H. Harvey
Eileen A. Mallesch
Kathleen A. Rogers
Technology Committee
Jorge L. Benitez, Chair
B. Evan Bayh, III
Linda W. Clement-Holmes
C. Bryan Daniels
Laurent Desmangles
Mitchell S. Feiger
Thomas H. Harvey
Timothy N. Spence
Chairman
Fifth Third Bancorp
Timothy N. Spence
Chairman, Chief Executive Officer &
President
Nicholas K. Akins, Lead Director
Retired Chairman & Chief Executive Officer
American Electric Power Company
Kristine R. Garrett
Executive Vice President,
Group Regional President &
Head of Wealth & Asset Management
B. Evan Bayh, III
Senior Advisor
Apollo Global Management
Kala J. Gibson
Executive Vice President &
Chief Corporate Responsibility Officer
Jorge L. Benitez
Retired Chief Executive Officer
North America of Accenture plc
Kevin P. Lavender
Executive Vice President &
Head of Commercial Bank
Katherine B. Blackburn
Executive Vice President
Cincinnati Bengals, Inc.
James C. Leonard
Executive Vice President &
Chief Operating Officer
Emerson L. Brumback
Retired President & Chief Operating Officer
M&T Bank
Jeffrey A. Lopper
Senior Vice President &
Chief Accounting Officer
Linda W. Clement-Holmes
Retired Chief Information Officer
The Procter & Gamble Company
Nancy C. Pinckney
Executive Vice President &
Chief Human Resource Officer
C. Bryan Daniels
Founding Partner
Prairie Capital
Bryan D. Preston
Executive Vice President &
Chief Financial Officer
Laurent Desmangles
Retired Senior Partner & Managing Director
Boston Consulting
Jude A. Schramm
Executive Vice President &
Chief Information Officer
Mitchell S. Feiger
Retired Chief Executive Officer and President
MB Financial, Inc.
Robert P. Shaffer
Executive Vice President &
Chief Risk Officer
Thomas H. Harvey
Chief Executive Officer
Energy Innovation: Policy and Technology, LLC
Melissa S. Stevens
Executive Vice President &
Chief Marketing Officer
Gary R. Heminger
Retired Chief Executive Officer & Chairman
Marathon Petroleum Corporation
Susan B. Zaunbrecher
Executive Vice President,
Chief Legal Officer & Corporate Secretary
Eileen A. Mallesch
Retired Chief Financial Officer
Nationwide Property & Casualty Segment,
Nationwide Mutual Insurance Company
Michael B. McCallister
Retired Chairman & Chief Executive Officer
Humana, Inc.
Kathleen A. Rogers
Retired Executive Vice President
U.S. Bancorp
Marsha C. Williams
Retired Chief Financial Officer
Orbitz Worldwide, Inc.
Table of Contents
DIRECTORS AND OFFICERS
212 Fifth Third Bancorp
For the years ended December 31
$ in millions, except per share data
2024
2023
2022
EARNINGS AND DIVIDENDS
Net Income
$2,314
$2,349
$2,446
Common Dividends Declared
992
941
877
Preferred Dividends Declared
159
137
116
PER COMMON SHARE
Earnings
$3.16
$3.23
$3.38
Diluted Earnings
3.14
3.22
3.35
Cash Dividends Declared
1.44
1.36
1.26
Book Value
26.17
25.04
22.26
AT YEAR-END
Total Assets
$212,927
$214,574
$207,452
Total Loans and Leases (incl. Held for Sale)
120,431
117,612
122,487
Deposits
167,252
168,912
163,690
Bancorp Shareholders’ Equity
19,645
19,172
17,327
KEY RATIOS
Net Interest Margin (FTE)1
2.90 %
3.05 %
3.02 %
Efficiency Ratio (FTE)1
59.2 %
59.6 %
56.2 %
CET1 Capital Ratio
10.57 %
10.29 %
9.28 %
Tier 1 Risk-Based Capital Ratio
11.86 %
11.59 %
10.53 %
Total Risk-Based Capital Ratio
13.86 %
13.72 %
12.79 %
ACTUALS
Common Shares Outstanding (000’s)
669,854
681,125
683,386
Banking Centers
1,089
1,088
1,087
ATMs
2,080
2,104
2,132
Full-Time Equivalent Employees
18,616
18,724
19,319
1 Non-GAAP measure.
For further information, see the Non-GAAP Financial Measures section of MD&A.
2024
2023
Stock
Performance
High
Low
Dividends
Declared
Per Share
High
Low
Dividends
Declared
Per Share
Fourth Quarter
$49.07
$41.38
$0.37
$35.60
$22.49
$0.35
Third Quarter
43.85
35.17
0.37
29.45
24.52
0.35
Second Quarter
39.14
33.82
0.35
28.18
22.46
0.33
First Quarter
37.41
32.29
0.35
38.06
22.11
0.33
Includes intraday stock prices.
Fifth Third’s common stock is traded on the NASDAQ Global Select Market under the symbol “FITB.”
PERFORMANCE COMPARISON
FIFTH THIRD BANCORP
Corporate Address
38 Fountain Square Plaza
Cincinnati, OH 45263
53.com
1-800-972-3030
Investor Relations
(For Inquires of Shareholders Only)
38 Fountain Square Plaza
MD 1090FV
Cincinnati, OH 45263
ir@53.com
1-866-670-0468
TRANSFER AGENT
Equiniti Trust Company, LLC
For Correspondence:
Equiniti Trust Company, LLC
55 Challenger Road, 2nd floor
Ridgefield Park, NJ 07660
equiniti.com
helpAST@equiniti.com
1-888-294-8285
For Dividend Reinvestment
and Direct Stock Purchase
Plan Transaction Processing:
P.O. Box 922
Wall Street Station
New York, NY
10269-0560
PERFORMANCE COMPARISON