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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.11pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Real-time Form 4 intelligence. Smarter insider tracking.
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.13pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
disruptions+5
interruptions+4
adverse+3
breaches+2
impair+2
Positive rising
achieve+4
successfully+3
success+3
efficiencies+2
despite+2
Risk Factors (Item 1A)
12,040 words
ITEM 1A. RISK FACTORS
The risks and uncertainties listed below present risks that could have a material impact on the Bancorp’s business, financial condition or results of operations. 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. Refer to page 19 for cautionary information regarding forward-looking statements.
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, including the level of credit and reserves for credit . Fifth Third’s credit risk and credit 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 affected by economic or market conditions. Refer to the Credit Risk Management subsection of the Risk Management section in Item 7 of this Annual Report for more information on specific concentrations.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+4
fraud+4
litigation+1
escalates+1
deteriorated+1
Positive rising
benefit+5
positively+3
positive+2
leading+2
strong+1
MD&A (Item 7)
35,964 words
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Non-GAAP Financial Measures
Recent Accounting Standards
Critical Accounting Policies
Statements of Income Analysis
Business Segment Review
Balance Sheet Analysis
Risk Management - Overview
Credit Risk Management
Interest Rate and Price Risk Management
Liquidity Risk Management
Operational Risk Management
Legal and Regulatory Compliance Risk Management
Capital Management
Report of Independent Registered Public Accounting Firm
Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Summary of Significant Accounting and Reporting Policies
Long-Term Debt
Supplemental Cash Flow Information
Commitments, Contingent Liabilities and Guarantees
Fifth Third reserves for expected credit losses by establishing an allowance for credit losses through a charge to earnings. The amount of this allowance is based on Fifth Third’s assessment of credit losses expected to be incurred in the credit portfolios, including unfunded commitments, and 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. Fifth Third believes that both the ALLL and reserve for unfunded commitments are adequate to cover expected losses at December 31, 2025. However there is no assurance that they will be sufficient to cover all potential future credit losses associated with exposures existing at December 31, 2025, especially if economic conditions decline.
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, which may 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 threateneddefault 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.
Inability to refinance in public or private 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 public or private 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.
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, 2025). 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 markets 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.
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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 including those driven by a decline in the market value of the financial instruments;
• increased regulatory requirements;
• reductions in one or more of Fifth Third’s agency 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.
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. 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 access to capital markets is a key component of its funding strategy and is influenced by ratings assigned by rating agencies to Fifth Third, certain of its subsidiaries and particular classes of securities they issue. These ratings also affect the interest rates that Fifth Third pays when issuing new debt securities. A downgrade to Fifth Third or its subsidiaries’ credit rating could limit its access to the capital markets, affect its ability to retain deposits, cause creditors and business counterparties to raise collateral requirements, increase its borrowing costs and reduce profitability. Additionally, downgrades may trigger obligations or create liabilities under the terms of Fifth Third’s existing arrangements that could increase costs, impair the marketability of affected securities, prompt further downgrades and otherwise have a negative effect on Fifth Third’s financial condition or results of operations. 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.
The Bancorp is a separate and distinct legal entity from its subsidiaries and typically receives substantially all of its revenue from dividends from its subsidiaries. These dividends are the principal source of funds to pay dividends on the Bancorp’s stock and interest and principal on its debt. The ability of its 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 the Bancorp. Regulatory scrutiny of liquidity and capital levels at BHCs and banks has resulted in increased regulatory focus on all aspects of capital planning, including dividends and other distributions. In addition, the 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 the Bancorp’s 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.
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OPERATIONAL RISKS
Fifth Third’s business is dependent on the availability and performance of operational and information technology systems, including those provided by third-party service providers. Interruptions or failures could materially adversely affect operations.
Fifth Third’s operations depend on operational and information technology systems, including financial, accounting, transaction-execution, and other operational systems, as well as devices, hardware, and networks supporting those systems, all of which may be operated by both Fifth Third and/or by third-party service providers.
Failure, disruption, interruption or outage to any system may cause disruptions in critical business operations such as the ability to use accounting, deposit, loan, payment and other systems. It could also cause unfavorable effects to clients and customers, including delays or other disruptions in services, limitations on Fifth Third’s ability to collect data needed for its business, inability to settle or clear transactions, the possibility that fund transfers are completed erroneously and fraudulent transactions. While Fifth Third invests in automation and emerging technologies such as AI, to prevent, detect and remedy any interruptions or failures, manual oversight remains a critical component of its risk mitigation strategy. Exception handling and control testing are employed to help identify and remediate errors that may not be captured through automated processes. Despite these controls, failures are still possible and could result in operational disruptions or financial loss.
In addition, any security compromise or information technology system disruptions in the financial services industry could interrupt Fifth Third’s business or operations, harm its reputation, erode borrower confidence, negatively affect Fifth Third’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.
Risks of operational failures, disruptions or outages in Fifth Third’s operational and information technology systems, and those provided by third-party providers, can result from a variety of factors, only some of which may be wholly or partially within the control of Fifth Third, its third-party providers or the financial services industry more generally. Such events could affect Fifth Third’s systems or limit Fifth Third’s ability to use information technology due to effects on underlying infrastructure. Although Fifth Third regularly updates and replaces systems that it depends on, financial institutions generally continue to utilize some older systems alongside newer systems. Causes of system failures, disruptions or outages may be difficult to detect. While the Bancorp believes that its current business continuity plans are adequate, there can be no assurance that such plans will fully mitigate all potential risks to Fifth Third, its customers or its clients.
Third-party service providers with which Fifth Third does business, as well as vendors and other third parties with which Fifth Third’s customers do business, can also be sources of operational risk to Fifth Third, particularly where processes are highly concentrated or customer activities are beyond Fifth Third’s security and control systems, such as through the use of the internet, personal computers, tablets, smart phones and other mobile services. Fifth Third could also be held responsible for the failure of third-party service providers, as well as other third parties, to comply with applicable laws, rules or regulations.
Any failures or disruptions of Fifth Third’s systems or operations, including in connection with outages or disruptions of systems provided by third parties, could adversely affect Fifth Third’s business and results of operations by subjecting Fifth Third to losses or liability, among other negative impacts, including reputational harm, litigation, regulatory fines or penalties or losses not covered by insurance.
Fifth Third and its service providers are exposed to cybersecurity risks, including risk of cyber-attacks and other information security breaches, which create both operational and reputational risk for the Bank and its customers across all lines of business.
Fifth Third’s business is conducted primarily via digital and information technology systems. This includes the use of digital applications, cloud computing and third- and fourth-party providers that host and store customer, employee and operational information.
Failures, service interruptions, breaches or attempted breaches in the security of these environments occur frequently across the financial services industry including at Fifth Third and its third- and fourth-party providers. If a material event of this nature occurred at Fifth Third or one of its third- or fourth-party providers, it could result in disruptions to Fifth Third’s accounting, deposit, lending and other systems, and adversely affect its customer relationships.
Fifth Third 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, and requires its third-party service providers to maintain similar controls. Despite this, there can be no assurance that any cyber-attacks, security breaches or system failures or interruptions will not occur or, if any do occur, that it can be remediated in such a way to eliminate the risk.
Financial institutions are the targets of frequent efforts to breach systems, including through denial of service attacks, social engineering such as phishing and smishing, placement of insider threats, and ransomware, among others. Moreover, because the techniques used to cause such security breaches change frequently, may not be recognized until launched against a target and may originate from remote and less regulated areas around the world, Fifth Third may be unable to proactively address these techniques or to implement adequate preventative measures. The increasing interdependence and complexity of financial institutions and infrastructure also means a disruption, compromise or failure that
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affects one segment of the financial services industry could also impact Fifth Third. The prospect that AI may be used to conduct attacks may make them more difficult to detect. Additionally, the growing sophistication of AI increases the risk of cyber-attacks.
Despite Fifth Third’s efforts to prevent a cyber-attack, a successful cyber-attack could persist for an extended period 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 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.
Additionally, Fifth Third uses third- and fourth-party providers to host data, products, services, systems or platforms for Fifth Third, or in some cases to 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. Even with reasonable investment and diligence by Fifth Third, Fifth Third’s ability to prevent cyber-attacks, security breaches or system failures or interruptions impacting its third- and fourth-party service providers may be limited. Financial services 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. The risks relating to security and availability of Fifth Third’s systems 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. While controls are robust, the speed and automation of these systems introduce a risk of erroneous transactions that could result in financial loss. 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; and, Fifth Third cannot guarantee that cybersecurity insurance policies will not deny coverage, or that existing insurance coverage will continue to be available on acceptable terms. 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.
Further, clients and customers use their own devices to utilize mobile banking and online services. Not all of Fifth Third’s clients, customers or counterparties have appropriate controls in place to protect information exchanged between them and Fifth Third. This may create new security risks and increase the likelihood of security incidents impacting customers’ information. Customers’ information may not always be protected by third-party applications or other third-party technology used in connection with such services. This can result and has resulted in fraud.
A security breach impacting systems operated by or on behalf of Fifth Third, or the loss or corruption of confidential information such as customer data, business results, and transaction records could adversely impact Fifth Third in numerous material ways, including by requiring public notification about the incident, causing financial losses, impacting Fifth Third’s ability to provide timely and accurate financial information in compliance with legal and regulatory requirements, all of which could result in regulatory sanctions, litigation, reputational harm, monetary loss and the loss of customer confidence in Fifth Third. Additionally, security breaches involving the loss, mishandling, theft or corruption of customer or client information could result in adverse consequences including financial losses to Fifth Third's customers, litigation, regulatory sanctions, lost customers and revenue, increased costs and reputational harm.
For more detail on Fifth Third’s cybersecurity governance structure and practices, see Item 1C of this Annual Report.
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, financial condition, results of operations 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, financial condition, results of operations 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 acquire or protect rights to its licensed or owned intellectual property or 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
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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 become involved in licensing disputes or other litigation related to intellectual property or 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, such as AI, 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, 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. Fifth Third’s competitors may 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. 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.
Further, Fifth Third may utilize new technology, such as AI, in connection with its business and operations. AI may be developed internally by Fifth Third, or may be provided to Fifth Third by third- or fourth-party service providers. Any such 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, products or services and/or technologies could have a material adverse effect on Fifth Third’s business, financial condition and results of operations.
AI may introduce Fifth Third to novel or intensified legal, regulatory, ethical, operational, reputational or other risks. AI models employed by Fifth Third or its service providers might be flawed due to improper design, implementation, or training or outputs based on data or algorithms that are incomplete, inadequate, misleading, biased or of poor quality. These flaws may not be easily identifiable. Additionally, there is no certainty that Fifth Third’s use of AI will successfullyenhance its business operations or achieve its intended outcomes, and its competitors may adopt AI more swiftly or effectively than Fifth Third does.
AI usage is subject to a range of existing laws and regulations. AI is also expected to be governed by new laws and regulations, or new applications of existing laws and regulations. AI is under ongoing scrutiny by various governmental and regulatory bodies, with federal, state and international authorities either implementing or considering legal frameworks that could impact Fifth Third’s ability to leverage AI effectively. Fifth Third may find it challenging to predict and adapt to these rapidly evolving legal requirements. Additionally, if Fifth Third does not possess adequate rights to the data or algorithms underpinning its AI solutions, or the outputs they generate, Fifth Third could face liabilities for breaching applicable laws and regulations. The limited experience with novel AI algorithms or applications within financial services generally, coupled with the swift pace of technological advancements and the rapid adoption of AI by Fifth Third’s partners and competitors, may hinder Fifth Third’s ability to effectively mitigate or detect these risks. Any perceived or actual shortcomings in addressing AI-related concerns could adversely affect Fifth Third’s business and operations.
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 financial condition, results of operations or prospects or lead to significant reputational risks and other effects. The industry fraudthreat continues to evolve, including but not limited to strategies such as card fraud, check fraud, electronic fraud, wire fraud, social engineering, the use of AI for impersonation and other schemes, malware and phishing attacks for identity theft and account takeover. Fifth Third continues to invest in fraudprevention 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 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 sufferadverse consequences to its business, financial condition and results of operations.
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.
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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 businesses. Also, a violation of law or regulation by another financial institution may give rise to an inquiry into 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 punitivedamages 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, criminalpleas as part of the resolutions of matters, and any such resolution of a matter involving Fifth Third could lead to increased exposure to private litigation, adversely affect Fifth Third’s reputation and result in limitations on Fifth Third’s ability to do business in certain jurisdictions.
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.
Fifth Third is also subject to risk from potential employee misconduct and in some instances, may be held responsible for the failure of certain third parties, including service providers, vendors, business partners, customers or certain companies in which Fifth Third has invested, to comply with applicable laws, rules or regulations. Substantial legal liability or 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 and may involve claims for substantial compensatory and/or punitivedamages. 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 for all legal proceedings where it faces a risk of loss. In addition, 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.
For further information on specific legal and regulatory proceedings, refer to Note 19 of the Notes to Consolidated Financial Statements.
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 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. This includes many regulations related to Fifth Third’s banking, investment banking, securities underwriting, market making, investment management and retail and institutional brokerage services businesses offered through the Bancorp’s subsidiaries. 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. 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 comply with applicable legislation and regulations, Fifth Third may be subject to litigation, fines, penalties or judgments, or material regulatory restrictions on its businesses, which could adversely affect operations and, in turn, financial results, or that materially adversely affect its shareholders. Future changes in laws or regulations 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. 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.
Fifth Third cannot predict whether or what pending or future legislation will be adopted or the 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
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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 within the course of business, such as rating agencies, insurance companies and investors.
Bank failures may create market volatility and regulatory uncertainty which could have a material adverse effect on Fifth Third’s business and financial condition. 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 or regulations 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 financial condition and results of operations. Heightened standards under new laws or regulations 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 activities. Other changes in laws or regulations could cause Fifth Third’s third-party service providers and other vendors to increase prices 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 sufferharm 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 obtained or 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.
Fifth Third and other financial institutions are highly regulated and subject to extensive oversight, supervision and examination by regulators and self-regulatory entities. In this regard, government authorities, including the bank regulatory agencies and law enforcement, may pursue 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. Government enforcement authority includes the ability to: assess significant civil or criminal monetary penalties, fines or restitution; issue cease and desist or removal orders; and 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 could restrict or limit Fifth Third. 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.
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.
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 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
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officers. 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.
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. 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 directors of the FDIC and the FRB upon a two-thirds vote. Liquidation proceedings will be funded by the Orderly Liquidation Fund, 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 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, economic and public health uncertainties and changes may adversely affect Fifth Third.
Global financial markets, including the U.S., face political and economic uncertainties (such as recent budget deficitconcerns and political conflict over legislation to raise the U.S. government’s debt limit or a prolonged government shutdown) that may delay investment and hamper economic activity. International events such as trade disputes, separatist movements, leadership changes and political and military conflicts could adversely affect global financial activity and markets and could negatively affect the U.S. economy. The impact of widespread health emergencies may also adversely impact global markets and Fifth Third’s operations. 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 results of operations and financial condition could be adversely affected. 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 business, financial condition and results of operations. In the event that these conditions recur or result in a prolonged economic downturn, Fifth Third’s financial position, results of operations 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’
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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. 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 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.
Changes in the market could impact Fifth Third’s mortgage banking business.
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.
Market conditions can also affect Fifth Third’s contractual obligations related to residential mortgage loans sold to various parties, including government-sponsored enterprises and other financial institutions for investment or private-label securitization. If Fifth Third breaches contractual representations or warranties and does not remedy the breach within a specified period, it may be required to repurchase loans, indemnify the securitization trust, investor, or insurer, or reimburse them for credit losses. As a result, Fifth Third has established reserves for probable losses related to sold loans; however, if economic conditions or the housing market deteriorate, or if repurchase demands and Fifth Third’s success in appealing such requests differ from expectations, repurchase obligations and lossseverity could increase, requiring material additions to reserves. There can be no assurance that reserves will be adequate or that losses will not have a material adverse effect on Fifth Third’s financial condition or results of operations.
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, specialty finance, private credit, financial 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. These other firms may be significantly different than Fifth Third. For example, they may be larger and have access to customers and financial resources that are beyond Fifth Third’s capability or they may be non-regulated allowing them to be more agile. Fifth Third competes with these firms with respect to capital, access to capital, revenue generation, products, services, transaction execution, innovation,
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reputation, talent and price. For example, as a result of the GENIUS Act, passed in 2025 to provide a regulatory framework for stablecoins in the U.S., increased competition may emerge from issuers of stablecoins and providers of related technology.
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 successful or effective, Fifth Third’s business and results may suffer. Additionally, these strategies 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 fraudlosses, 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 and expects to continue investing in physical 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 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 acquisition or investment opportunities, integrating acquisitions, or evaluating or entering into strategic investments and relationships may hinder Fifth Third from achieving the expected benefits from these acquisitions, investments or relationships.
Inherent uncertainties exist when identifying, 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.
Fifth Third may also not realize the expected benefits of the acquisition due to lower financial results pertaining to the acquired entity or assets. 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 certain businesses or investments but such sales may not yield desiredgains or equity increases. Additionally, lost income from these sales could have an adverse effect on its future earnings and 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
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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.
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, governance, acquisitions, employee misconduct, service quality, or associations with certain customers, business partners, investments or vendors, as well as developments from any of the other risks described above, may damage Fifth Third’s reputation and generate negative public opinion. Since Fifth Third conducts most of its operations under the Fifth Third brand, reputational damage in one area can affect others. Regulatory actions, activist campaigns and community responses may also damage Fifth Third’s reputation. While traditional media once dominated public perception, social media now facilitates the rapid dissemination of information or misinformation. Though Fifth Third monitors social media channels, harmful content can still circulate widely that could damage Fifth Third’s reputation. Negative perception may adversely affect Fifth Third’s ability to attract and keep customers, increase litigation and regulatory action and raise the chance of accelerated deposits withdrawals.
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 rapidly evolve. These laws and regulations may impose additional compliance or disclosure obligations on Fifth Third. 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.
States throughout Fifth Third’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 or practices based on environmental or social criteria. Activist groups and state officials have targeted firms with public criticism and penalties either for engaging in, or not engaging in, 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 contrasting opinions about how a financial institution should address these issues.
GENERAL BUSINESS RISKS
Changes in accounting standards or interpretations could impact Fifth Third’s reported financial condition and earnings.
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, Fifth Third may not adequately prepare for future events and may sufferlosses 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.
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.
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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 sufferunexpectedlosses 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 financial position or results of operations.
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 Item 7 of this Annual Report for more information regarding management’s significant estimates.
Severe weather events may impact Fifth Third’s loan portfolio and operations.
Severe weather events may adversely affect Fifth Third’s operations and financial performance. 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 hurricanes, tornadoes, wildfires and other natural disasters. The frequency and severity of these events are unpredictable, and large-scale occurrences could damage properties securing loans, impair borrowers’ ability to repay, disrupt its physical operations including closures and infrastructure damage, and may interfere with Fifth Third’s ability to carry out business and serve clients and customers.
RISKS RELATING TO THE ACQUISITION AND INTEGRATION OF COMERICA INCORPORATED (“THE COMERICA MERGER”)
Fifth Third expects to incur substantial expenses related to the Comerica Merger and to the integration of Comerica.
Fifth Third has incurred and expects to incur a number of costs associated with the Comerica Merger and the integration of Comerica. These costs include financial advisory, legal, accounting, consulting and other advisory fees, severance/employee benefit‐related costs, public company filing fees and other regulatory fees and financial printing and other related costs. There are also a large number of processes, policies, procedures, operations, technologies and systems that need to be integrated. Fifth Third will also dedicate resources toward meeting the higher regulatory and supervisory standards applicable to Category III bank holding companies, a classification that was not applicable to Fifth Third prior to the completion of the Comerica Merger.
While Fifth Third has assumed that a certain level of costs will be incurred, there are many factors beyond its control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that Fifth Third will incur are, by their nature, difficult to estimate accurately. Fifth Third expects these expenses will, particularly in the near term, exceed the savings achieved from the elimination of duplicative expenses and the realization of economies of scale. These integration expenses will result in charges against earnings as a result of the Comerica Merger or the integration of Comerica, and the amount and timing of such charges are uncertain at present.
Fifth Third may fail to realize all of the anticipated benefits of the Comerica Merger, or those benefits may take longer to realize than expected due to factors that may be outside Fifth Third’s or Comerica’s control. Fifth Third may also encounter significant difficulties in integrating Comerica.
Fifth Third may fail to realize the anticipated benefits of the Comerica Merger, including, among other things, anticipated revenue and cost synergies, due to factors that may be outside either party’s control, including, but not limited to, changes in laws or regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise, or general economic, political, legislative or regulatory conditions, adverse developments in political or community sentiment, the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against Fifth Third, and known or potential unknown contingencies and liabilities of Comerica assumed in connection with the consummation of the Comerica Merger.
The success of the Comerica Merger, including anticipated benefits and cost savings, will depend, in part, on Fifth Third’s ability to successfully integrate Comerica’s operations in a manner that results in various benefits and that permits growth opportunities, including among other things, enhanced revenues and revenue synergies, an expanded market reach and operating efficiencies, and does not materially disrupt existing customer relationships of Fifth Third or Comerica or result in decreased revenues due to loss of customers. There is a risk of potential failures, outages, interruptions and other disruptions resulting from the integration of certain systems, networks, infrastructures and related technology. The success of the Comerica Merger also depends on Fifth Third’s ability to successfully integrate Comerica into its compliance systems and corporate culture, which Fifth Third believes requires extensive investment.
There can be no assurance that Fifth Third will be able to accurately anticipate and respond to the changing demands it will face as it continues to expand its operations or that it will be able to achieve further growth at all. Additionally, Fifth Third faces risks that any business, technology, service or product it integrates from Comerica in connection with the Comerica Merger may significantly under-
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perform relative to its expectations, and that Fifth Third may not achieve the benefits it expects, which could, among other things, also result in a write-down of goodwill and other intangible assets associated with the Comerica Merger.
If Fifth Third fails to realize the anticipated benefits of the Comerica Merger, or if those benefits take longer to realize than expected, it could have an adverse effect on its business, financial condition and results of operations.
Fifth Third’s future results may suffer if Fifth Third does not effectively manage its expanded operations following the Comerica Merger.
Following the Comerica Merger, the size and scope of Fifth Third’s business will increase beyond its current size and scope. Fifth Third’s future success depends, in part, upon the ability to manage its expanded businesses, which will pose substantial challenges for management, including challenges related to the management of new employees and monitoring of new operations and associated increased costs and complexity. There can be no assurances Fifth Third will be successful or that Fifth Third will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Comerica Merger.
In addition, following the Comerica Merger, Fifth Third may be subject to increased scrutiny by, and/or additional regulatory requirements of, governmental authorities as a result of the Comerica Merger or the size, scope and complexity of Fifth Third’s business operations, which may have an adverse effect on Fifth Third’s business, operations or stock price.
Following completion of the Comerica Merger, Fifth Third may be subject to business uncertainties that could adversely affect Fifth Third’s business and operations.
As a result of the Comerica Merger, existing customers, suppliers and other business partners of Fifth Third and of Comerica could decide to no longer do business with Fifth Third, reducing its anticipated benefits. Employee attrition could delay or disrupt the integration process. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on Fifth Third’s ability to meet customer expectations, thereby adversely affecting business and results of operations. The failure to retain members of Fifth Third’s management team and other key personnel could also impair its ability to execute its strategy and implement operational initiatives, thereby having a material adverse effect on its financial condition and results of operation. It is possible that the integration process could result in the disruption of Fifth Third’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of Fifth Third to maintain relationships with customers and employees or to achieve anticipated benefits of the Comerica Merger.
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Restrictions on Dividends and Capital Actions
Legal and Regulatory Proceedings
Investment Securities
Related Party Transactions
Loans and Leases
Income Taxes
Credit Quality and the Allowance for Loan and Lease Losses
Retirement and Benefit Plans
Bank Premises and Equipment
Accumulated Other Comprehensive Income
Operating Lease Equipment
Common, Preferred and Treasury Stock
Lease Obligations – Lessee
Stock-Based Compensation
Goodwill
Other Noninterest Income and Other Noninterest Expense
Intangible Assets
Earnings Per Share
Variable Interest Entities
Fair Value Measurements
Sales of Receivables and Servicing Rights
Regulatory Capital Requirements and Capital Ratios
Derivative Financial Instruments
Parent Company Financial Statements
Other Assets
Business Segments
Short-Term Borrowings
Business Combination
Subsequent Event
Management’s Assessment as to the Effectiveness of Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Ten Year Comparison
Directors and Officers
Corporate Information
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GLOSSARY OF ABBREVIATIONS AND ACRONYMS
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
PCD : Purchase Credit-Deteriorated
DTCC : Depository Trust & Clearing Corporation
PSA : Performance Share Award
ERM : Enterprise Risk Management
PSL : Purchased Seasoned Loans
ERMC : Enterprise Risk Management Committee
RCC : Risk and Compliance Committee
EVE : Economic Value of Equity
ROU : Right-of-Use
FASB : Financial Accounting Standards Board
RSU : Restricted Stock Unit
FDIC : Federal Deposit Insurance Corporation
SAR : Stock Appreciation Right
FHA : Federal Housing Administration
SBA : Small Business Administration
FHLB : Federal Home Loan Bank
SEC : United States Securities and Exchange Commission
FHLMC : Federal Home Loan Mortgage Corporation
SOFR : Secured Overnight Financing Rate
FICO : Fair Isaac Corporation (credit rating)
TBA : To Be Announced
FINRA : Financial Industry Regulatory Authority
TILA : Truth in Lending Act
FNMA : Federal National Mortgage Association
TRA : Tax Receivable Agreement
FRB : Federal Reserve Bank
U.S. : United States of America
FTE : Fully Taxable Equivalent
U.S. GAAP : United States Generally Accepted Accounting
FTP : Funds Transfer Pricing
Principles
FTS : Fifth Third Securities, Inc.
VA : United States Department of Veterans Affairs
GDP : Gross Domestic Product
VIE : Variable Interest Entity
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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, 2025, 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.
Acquisition of Comerica Incorporated
On February 1, 2026, Fifth Third Bancorp closed the merger with Comerica Incorporated (“Comerica”) in an all-stock transaction valued at approximately $12.7 billion. Under the terms of the merger agreement, each outstanding share of Comerica’s common stock was converted into the right to receive 1.8663 shares of Fifth Third Bancorp common stock and each outstanding share of Comerica’s preferred stock was converted into the right to receive one share of a newly created series of preferred stock with comparable terms issued by the Bancorp.
Refer to Note 32 of the Notes to Consolidated Financial Statements for more information.
Redemption of Preferred Stock
On September 30, 2025, the Bancorp redeemed all 14,000 outstanding shares of its 4.500% fixed-rate reset non-cumulative perpetual preferred stock, Series L, and the corresponding depositary shares, pursuant to its terms and conditions. Prior to the redemption, the dividend rate on the Series L preferred stock was set to reach its first dividend reset date at which time the dividend would have reset to the five-year U.S. Treasury rate plus 4.215%.
Refer to Note 24 of the Notes to Consolidated Financial Statements for more information.
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Share Repurchase Activity
During the year ended December 31, 2025, the Bancorp repurchased $525 million of common stock in accelerated share repurchase transactions.
On June 13, 2025, the Bancorp’s Board of Directors 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 superseded the prior authorization from June 2019 and did not include specific targets or an expiration date.
Refer to Note 24 of the Notes to Consolidated Financial Statements for additional information on share repurchase activity.
Senior Notes Offerings
On January 28, 2025, the Bank issued and sold, under its bank note 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, to, but excluding, the maturity date, the senior notes will bear interest at a rate of compounded SOFR plus 0.81%.
On January 28, 2025, the Bank issued and sold, under its bank note 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%.
Refer to Note 17 of the Notes to Consolidated Financial Statements for more information.
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 and liquidity 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 risk-based Capital Ratio: CET1 risk-based 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
• 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.
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TABLE 1: Earnings Summary
For the years ended December 31 ($ in millions, except per share data)
Income Statement Data
Net interest income (U.S. GAAP)
Net interest income (FTE) (a)(b)
Noninterest income
Total revenue (FTE) (a)(b)
Provision for credit losses
Noninterest expense
Net income
Net income available to common shareholders
Common Share Data
Earnings per share - basic
Earnings per share - diluted
Cash dividends declared per common share
Book value per share
Market value per share
Financial Ratios
Return on average assets
Return on average common equity
Return on average tangible common equity (b)
Dividend payout
(a) Amounts presented on an FTE basis. The FTE adjustments were $20, $24 and $25 for the years ended December 31, 2025, 2024 and 2023, 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, 2025 was $2.4 billion, or $3.53 per diluted share, which was net of $146 million of preferred stock dividends. On September 30, 2025, the Bancorp redeemed all outstanding shares of its preferred stock, Series L, resulting in a $4 million reduction to net income available to common shareholders, which was recognized as incremental dividends on preferred stock in the Bancorp’s Consolidated Statements of Income. 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 of preferred stock dividends.
Net interest income on an FTE basis (non-GAAP) was $6.0 billion for the year ended December 31, 2025, increasing $348 million compared to the prior year. Net interest income for the year ended December 31, 2025 was positively impacted by lower funding costs due to both the benefit of lower short-term market rates and a decrease in the average balances of interest-bearing liabilities. Additionally, higher average balances of loans and leases and fixed rate consumer loan yield improvement driven by higher intermediate-term and long-term interest rates drove interest income growth. These positive impacts were partially offset by decreases in the average balances of and lower yields on other short-term investments as well as lower yields on average commercial loans and leases driven by lower short-term market rates. Net interest margin on an FTE basis (non-GAAP) was 3.11% for the year ended December 31, 2025 compared to 2.90% for the year ended December 31, 2024.
The provision for credit losses was $662 million for the year ended December 31, 2025 compared to $530 million in the prior year. Provision expense for the year ended December 31, 2025 increased primarily driven by the fraud-related impairment of an asset-backed finance commercial loan which included a charge-off of $178 million and a specific allowance of $20 million, as well as increases in specific reserves on individually evaluated commercial loans and higher period-end loan and lease balances. The increase in provision expense for the year ended December 31, 2025 was partially offset by factors that reduced the ACL from December 31, 2024, including the impacts of changes in both the mix and credit quality of the consumer loan portfolio and improvements in probability of default ratings on collectively-evaluated commercial loans. Net losses charged off as a percent of average portfolio loans and leases were 0.60% and 0.45% for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025, nonperforming portfolio assets as a percent of portfolio loans and leases and OREO decreased to 0.65% compared to 0.71% at December 31, 2024. 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 increased $186 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to increases in wealth and asset management revenue, commercial payments revenue, consumer banking revenue, mortgage banking net revenue and other noninterest income, partially offset by decreases in commercial banking revenue and capital markets fees.
Noninterest expense increased $111 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to increases in compensation and benefits expense, technology and communications expense and marketing expense, partially offset by a decrease in other noninterest expense.
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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 as of December 31, 2025. As of December 31, 2025, the Bancorp’s capital ratios, as defined by the U.S. banking agencies, were:
• CET1 risk-based capital ratio: 10.81%;
• Tier 1 risk-based capital ratio: 11.87%;
• Total risk-based capital ratio: 13.78%;
• Leverage ratio: 9.41%
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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)
Net interest income (U.S. GAAP)
Add: FTE adjustment
Net interest income on an FTE basis (1)
Interest income (U.S. GAAP)
Add: FTE adjustment
Interest income on an FTE basis (2)
Interest expense (3)
Noninterest income (4)
Noninterest expense (5)
Average interest-earning assets (6)
Average interest-bearing liabilities (7)
Ratios:
Net interest margin on an FTE basis (1) / (6)
Net interest rate spread on an FTE basis ((2) / (6)) - ((3) / (7))
Efficiency ratio on an FTE basis (5) / ((1) + (4))
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)
Net income available to common shareholders (U.S. GAAP)
Add: Intangible amortization, net of tax
Tangible net income available to common shareholders (1)
Average Bancorp shareholders’ equity (U.S. GAAP)
Less: Average preferred stock
Average goodwill
Average intangible assets
Average tangible common equity (2)
Return on average tangible common equity (1) / (2)
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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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)
Total Bancorp Shareholders’ Equity (U.S. GAAP)
Less: Preferred stock
Goodwill
Intangible assets
AOCI
Tangible common equity, excluding AOCI (1)
Add: Preferred stock
Tangible equity (2)
Total Assets (U.S. GAAP)
Less: Goodwill
Intangible assets
AOCI, before tax
Tangible assets, excluding AOCI (3)
Ratios:
Tangible equity as a percentage of tangible assets (2) / (3)
Tangible common equity as a percentage of tangible assets (1) / (3)
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RECENT ACCOUNTING STANDARDS
Note 1 of the Notes to Consolidated Financial Statements provides a discussion of the significant new accounting standard applicable to the Bancorp during 2025 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, 2025.
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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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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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 is performed as of October 1 each year, and more frequently if events or circumstances indicate that there may be impairment.
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 impairmentloss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. A recognized impairmentloss 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 litigationloss 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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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, 2025
December 31, 2024
Balance
Level 3
Balance
Level 3
Assets carried at fair value
As a percent of total assets
Liabilities carried at fair value
As a percent of total liabilities
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, 2025 with the year ended December 31, 2024. Refer to the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2024 for additional information comparing the results for the year ended December 31, 2024 to the year ended December 31, 2023.
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, 2025, 2024 and 2023, 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 $6.0 billion for the year ended December 31, 2025, increasing $348 million compared to the prior year. Net interest income for the year ended December 31, 2025 was positively impacted by lower funding costs due to both the benefit of lower short-term market rates and a decrease in the average balances of interest-bearing liabilities. Additionally, higher average balances of loans and leases and fixed rate consumer loan yield improvement driven by higher intermediate-term and long-term interest rates drove interest income growth. These positive impacts were partially offset by decreases in the average balances of and lower yields on other short-term investments as well as lower yields on average commercial loans and leases driven by lower short-term market rates.
Net interest rate spread on an FTE basis (non-GAAP) was 2.40% for the year ended December 31, 2025 compared to 2.08% during the year ended December 31, 2024. Changes in market rates resulted in a decrease on rates paid on average interest-bearing liabilities of 55 bps, partially offset by a decrease in yields on average interest-earning assets of 23 bps for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Net interest margin on an FTE basis (non-GAAP) was 3.11% for the year ended December 31, 2025 compared to 2.90% for the year ended December 31, 2024. Net interest margin for the year ended December 31, 2025 was positively impacted by the previously mentioned increase in net interest rate spread and a decrease in the average balances of other short-term investments.
Interest income on an FTE basis (non-GAAP) from loans and leases decreased $14 million from the year ended December 31, 2024 primarily driven by a decrease in yields on average commercial loans and leases associated with lower short-term market rates, partially offset by an increase in the average balances of loans and leases and higher yields on average consumer loans due to fixed-rate asset repricing. 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 securities and other short-term investments decreased $513 million from the year ended December 31, 2024 primarily due to a decrease in the average balances of other short-term investments coupled with lower yields on those balances associated with lower short-term market rates as well as a decrease in the average balances of taxable securities.
Interest expense on average core deposits decreased $666 million from the year ended December 31, 2024 primarily due to a decrease in the cost of average interest-bearing core deposits to 234 bps for the year ended December 31, 2025 from 287 bps for the year ended December 31, 2024. 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 decreased $209 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in the rates paid on average wholesale funding and decreases in the average balances of long-term debt and CDs over $250,000, partially offset by an increase in the average balances of FHLB advances. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s borrowings. During the year ended December 31, 2025, average wholesale funding represented 15% of average interest-bearing liabilities compared to 16% for the year ended December 31, 2024. For more information on the Bancorp’s interest rate risk management, including estimated earnings sensitivity to changes in market interest rates, refer to the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A.
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TABLE 6: Consolidated Average Balance Sheets and Analysis of Net Interest Income on an FTE Basis
For the years ended December 31
($ 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
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total consumer loans
Total loans and leases
Securities:
Taxable
Exempt from income taxes (a)
Other short-term investments
Total interest-earning assets
Cash and due from banks
Other assets
Allowance for loan and lease losses
Total assets
Liabilities and Equity:
Interest-bearing liabilities:
Interest checking deposits
Savings deposits
Money market deposits
CDs $250,000 or less
Total interest-bearing core deposits
CDs over $250,000
Federal funds purchased
Securities sold under repurchase agreements
FHLB advances
Derivative collateral and other borrowed money
Long-term debt
Total interest-bearing liabilities
Demand deposits
Other liabilities
Total liabilities
Total equity
Total liabilities and equity
Net interest income (FTE) (b)
Net interest margin (FTE) (b)
Net interest rate spread (FTE) (b)
Interest-bearing liabilities to interest-earning assets
(a) The FTE adjustments included in the above table were $20, $24 and $25 for the years ended December 31, 2025, 2024 and 2023, respectively.
(b) This is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
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TABLE 7: Changes in Net Interest Income Attributable to Volume and Yield/Rate on an FTE Basis (a)
For the years ended December 31
2025 Compared to 2024
2024 Compared to 2023
($ in millions)
Volume
Yield/Rate
Total
Volume
Yield/Rate
Total
Assets:
Interest-earning assets:
Loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total consumer loans
Total loans and leases
Securities:
Taxable
Exempt from income taxes
Other short-term investments
Total change in interest income
Liabilities:
Interest-bearing liabilities:
Interest checking deposits
Savings deposits
Money market deposits
CDs $250,000 or less
Total interest-bearing core deposits
CDs over $250,000
Federal funds purchased
Securities sold under repurchase agreements
FHLB advances
Derivative collateral and other borrowed money
Long-term debt
Total change in interest expense
Total change in net interest income
(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 for credit losses was $662 million for the year ended December 31, 2025 compared to $530 million in the prior year. Provision expense for the year ended December 31, 2025 increased primarily driven by the fraud-related impairment of an asset-backed finance commercial loan which included a charge-off of $178 million and a specific allowance of $20 million, as well as increases in specific reserves on individually evaluated commercial loans and higher period-end loan and lease balances. The increase in provision expense for the year ended December 31, 2025 was partially offset by factors that reduced the ACL from December 31, 2024, including the impacts of changes in both the mix and credit quality of the consumer loan portfolio and improvements in probability of default ratings on collectively-evaluated commercial loans.
The ALLL decreased $99 million from December 31, 2024 to $2.3 billion at December 31, 2025. At December 31, 2025, the ALLL as a percent of portfolio loans and leases decreased to 1.84%, compared to 1.96% at December 31, 2024. The reserve for unfunded commitments increased $23 million from December 31, 2024 to $157 million at December 31, 2025. At December 31, 2025, the ACL as a percent of portfolio loans and leases decreased to 1.96%, compared to 2.08% at December 31, 2024.
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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 increased $186 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The following table presents the components of noninterest income:
TABLE 8: Components of Noninterest Income
For the years ended December 31 ($ in millions)
Wealth and asset management revenue
Commercial payments revenue
Consumer banking revenue
Capital markets fees
Commercial banking revenue
Mortgage banking net revenue
Other noninterest income
Securities gains, net
Total noninterest income
Wealth and asset management revenue increased $57 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by increases in personal asset management revenue and brokerage income. The Bancorp’s trust and registered investment advisory businesses had approximately $690 billion and $634 billion in total assets under care as of December 31, 2025 and 2024, respectively, and managed $80 billion and $69 billion in assets for individuals, corporations and not-for-profit organizations as of December 31, 2025 and 2024, respectively.
Commercial payments revenue increased $22 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by an increase in treasury management fees due to higher average revenue per existing customer, which included the benefit of cross sales to existing customers, and new client acquisition.
Consumer banking revenue increased $16 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by an increase in deposit fees due to increased overdraft occurrences.
Capital markets fees decreased $9 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by decreases in institutional brokerage revenue and corporate bond fees.
Commercial banking revenue decreased $28 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by decreases in operating lease income, business lending fees and lease remarketing fees.
Mortgage banking net revenue increased $16 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
The following table presents the components of mortgage banking net revenue:
TABLE 9: Components of Mortgage Banking Net Revenue
For the years ended December 31 ($ in millions)
Origination fees and gains on loan sales
Net mortgage servicing revenue:
Gross mortgage servicing fees
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs
Net mortgage servicing revenue
Total mortgage banking net revenue
Origination fees and gains on loan sales increased $11 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by higher volumes of saleable rate lock mortgage loan originations. Residential mortgage loan originations increased to $7.5 billion for the year ended December 31, 2025 from $6.5 billion for the year ended December 31, 2024 primarily due to lower mortgage interest rates, which also drove an increase in correspondent channel volume, and an increase in the average loan size originated.
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The following table presents the components of net valuation adjustments on the MSR portfolio and the impact of the Bancorp’s hedging strategy:
TABLE 10: Components of Net Valuation Adjustments on MSRs
For the years ended December 31 ($ in millions)
Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio
Changes in fair value:
Due to changes in inputs or assumptions (a)
Other changes in fair value (b)
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs
(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.
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 the years ended December 31, 2025, 2024 and 2023.
The Bancorp’s total residential mortgage loans serviced at December 31, 2025 and 2024 were $104.8 billion and $110.9 billion, respectively, with $87.8 billion and $94.2 billion, respectively, of residential mortgage loans serviced for others.
Other noninterest income increased $114 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in the loss on the swap associated with the sale of Visa, Inc. Class B Shares, an increase in equity method investment income and litigation settlements. Refer to Note 28 of the Notes to Consolidated Financial Statements for additional information on the valuation of the swap associated with the sale of Visa, Inc. Class B Shares and Note 26 for more information on other noninterest income.
Net securities gains were $13 million for the year ended December 31, 2025 compared to $15 million for the year ended December 31, 2024. For more information, refer to Note 4 of the Notes to Consolidated Financial Statements.
Noninterest Expense
Noninterest expense increased $111 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The following table presents the components of noninterest expense:
TABLE 11: Components of Noninterest Expense
For the years ended December 31 ($ in millions)
Compensation and benefits
Technology and communications
Net occupancy expense
Equipment expense
Loan and lease expense
Marketing expense
Card and processing expense
Other noninterest expense
Total noninterest expense
Efficiency ratio on an FTE basis (a)
(a) 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 $52 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by increases in base compensation and performance-based compensation. Full-time equivalent employees totaled 18,676 at December 31, 2025 compared to 18,616 at December 31, 2024.
Technology and communications expense increased $42 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by increased investments in strategic initiatives and technology modernization.
Marketing expense increased $27 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to increased spend on customer acquisition activities.
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The following table presents the components of other noninterest expense:
TABLE 12: Components of Other Noninterest Expense
For the years ended December 31 ($ in millions)
FDIC insurance and other taxes
Data processing
Leasing business expense
Losses and adjustments
Dues and subscriptions
Travel
Donations
Securities recordkeeping
Professional service fees
Postal and courier
Other, net
Total other noninterest expense
Other noninterest expense decreased $58 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to decreases in FDIC insurance and other taxes, leasing business expense and losses and adjustments partially offset by an increase in donations.
FDIC insurance and other taxes decreased $67 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the impact of the Bancorp’s updated estimate of its allocated share of the FDIC’s special assessment. Leasing business expense decreased $19 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by a decrease in depreciation expense associated with operating lease equipment. Losses and adjustments decreased $18 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to elevated expense levels in the prior year related to remediation items.
Donations increased $35 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a $50 million contribution to the Fifth Third Foundation in 2025 compared to a $15 million contribution in 2024.
Applicable Income Taxes
The Bancorp’s income before income taxes, applicable income tax expense and effective tax rate are as follows:
TABLE 13: Applicable Income Taxes
For the years ended December 31 ($ in millions)
Income before income taxes
Applicable income tax expense
Effective tax rate
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 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 Research Credit program established under Section 41 of the IRC.
The effective tax rates for the years ended December 31, 2025 and 2024 were primarily impacted by tax credits and other tax benefits from CDC investments, which were partially offset by proportional amortization related to qualifying investments. The effective tax rates for the years ended December 31, 2025 and 2024 were also impacted by state tax expense and 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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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 decreased since December 31, 2024 as they were affected by the prevailing level of interest rates and repricing characteristics of the portfolio and to a lesser extent the impact of reduced liquidity premium assumptions throughout 2025. The credit rates for deposit products have also generally decreased since December 31, 2024 due to decreasing short-term interest rates and reduced liquidity premium assumptions.
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 14: Income (Loss) Before Income Taxes (FTE) by Segment
For the years ended December 31 ($ in millions)
Commercial Banking
Consumer and Small Business Banking
Wealth and Asset Management
General Corporate and Other (a)
Income before income taxes (FTE) (b)
(a) General Corporate and Other is not a reportable segment and is presented for reconciliation purposes.
(b) Includes FTE adjustments of $20, $24 and $25 for the years ended December 31, 2025, 2024 and 2023, respectively.
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Commercial Banking
Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and government and professional customers. In addition to the traditional lending and depository offerings, Commercial Banking products and services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing and syndicated finance.
The following table contains selected financial data for the Commercial Banking segment:
TABLE 15: Commercial Banking
For the years ended December 31 ($ in millions)
Income Statement Data
Net interest income (FTE) (a)
Provision for credit losses
Noninterest income:
Commercial payments revenue
Capital markets fees
Commercial banking revenue
Other noninterest income
Noninterest expense:
Compensation and benefits
Net occupancy and equipment expense
Other noninterest expense
Income before income taxes (FTE) (a)
Average Balance Sheet Data
Commercial loans and leases, including held for sale
Demand deposits
Interest checking deposits
Savings deposits
Money market deposits
Certificates of deposit
(a) Includes FTE adjustments of $11, $15 and $16 for the years ended December 31, 2025, 2024 and 2023, respectively.
Income before income taxes on an FTE basis was $1.3 billion for the year ended December 31, 2025 compared to $1.8 billion for the year ended December 31, 2024. The decrease was primarily driven by a decrease in net interest income on an FTE basis and increases in provision for credit losses and noninterest expense.
Net interest income on an FTE basis decreased $221 million from the year ended December 31, 2024 primarily driven by a decrease in FTP credits on deposits and a decrease in yields on average commercial loans and leases. These negative impacts were partially offset by a decrease in FTP charges on commercial loans and leases, a decrease in rates paid on average interest-bearing deposits and an increase in the average balances of commercial loans and leases.
Provision for credit losses increased $147 million from the year ended December 31, 2024 primarily driven by an increase net charge-offs on commercial loans and leases, which included $178 million resulting from the fraud-related impairment of an asset-backed finance commercial loan, partially offset by a decrease in the allocated provision for credit losses related to commercial criticized assets. Net charge-offs as a percent of average portfolio loans and leases increased to 62 bps for the year ended December 31, 2025 compared to 33 bps for the year ended December 31, 2024.
Noninterest income decreased $5 million from the year ended December 31, 2024 primarily driven by decreases in commercial banking revenue and capital markets fees, partially offset by an increase in commercial payments revenue. Refer to the Noninterest Income subsection of the Statement of Income Analysis section of MD&A for information on these fluctuations.
Noninterest expense increased $46 million from the year ended December 31, 2024 primarily driven by an increase in other noninterest expense, which increased $47 million compared to the same period in the prior year primarily driven by increases in allocated expenses, card and processing expense, credit valuation adjustments on derivatives associated with customer accommodation contracts and loan and lease expense, partially offset by a decrease in leasing business expense.
Average commercial loans and leases increased $1.6 billion from the year ended December 31, 2024 primarily driven by increases in average commercial and industrial loans, average commercial leases and average commercial mortgage loans. Refer to the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A for additional information on these fluctuations.
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Average deposits decreased $771 million from the year ended December 31, 2024 primarily due to decreases in average demand deposits and average interest checking deposits. Average demand deposits decreased $389 million compared to the same period in the prior year primarily as a result of lower average balances per customer account. Average interest checking deposits decreased $287 million compared to the same period in the prior year primarily as a result of lower average balances per customer account and a decrease in derivative collateral held as a result of lower interest rates.
Consumer and Small Business Banking
Consumer and Small Business Banking provides a full range of deposit and loan products to individuals and small businesses through a network of full-service banking centers and relationships with indirect and correspondent loan originators in addition to providing products designed to meet the specific needs of small businesses, including cash management services. Consumer and Small Business Banking includes the Bancorp’s residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending, solar energy installation and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Indirect lending activities include extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine dealers. Solar energy installation loans and certain other consumer loans are originated through a network of contractors and installers.
The following table contains selected financial data for the Consumer and Small Business Banking segment:
TABLE 16: Consumer and Small Business Banking
For the years ended December 31 ($ in millions)
Income Statement Data
Net interest income
Provision for credit losses
Noninterest income:
Consumer banking revenue
Wealth and asset management revenue
Mortgage banking net revenue
Commercial payments revenue
Other noninterest income
Noninterest expense:
Compensation and benefits
Net occupancy and equipment expense
Marketing expense
Loan and lease expense
Other noninterest expense
Income before income taxes
Average Balance Sheet Data
Consumer loans, including held for sale
Commercial loans, including held for sale
Demand deposits
Interest checking deposits
Savings deposits
Money market deposits
Certificates of deposit
Income before income taxes was $2.4 billion for the year ended December 31, 2025 compared to $2.5 billion for the year ended December 31, 2024. The decrease was primarily driven by a decrease in net interest income and an increase in noninterest expense, partially offset by an increase in noninterest income.
Net interest income decreased $104 million from the year ended December 31, 2024 primarily due to a decrease in FTP credits on deposits and an increase in FTP charges on loans and leases, partially offset by an increase in the average balances of and yields on loans and leases as well as a decrease in rates paid on average interest-bearing deposits.
Noninterest income increased $87 million from the year ended December 31, 2024 primarily driven by increases in wealth and asset management revenue, other noninterest income, consumer banking revenue and mortgage banking net revenue. Wealth and asset management revenue increased $32 million from the year ended December 31, 2024 primarily due to increases in brokerage income and personal asset management revenue. Other noninterest income increased $20 million from the year ended December 31, 2024 primarily due to the benefit from a litigation settlement and gains on the sale of branch-related real estate no longer intended to be used for banking purposes. Refer to the Noninterest Income subsection of the Statements of Income Analysis section of MD&A for information on the fluctuations in consumer banking revenue and mortgage banking net revenue.
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Noninterest expense increased $72 million from the year ended December 31, 2024 primarily due to increases in compensation and benefits expense and marketing expense. Compensation and benefits expense increased $40 million from the year ended December 31, 2024 primarily due to increases in base compensation and performance-based compensation. Marketing expense increased $23 million from the year ended December 31, 2024 primarily due to increased spend on customer acquisition activities.
Average consumer loans increased $2.8 billion from the year ended December 31, 2024 primarily due to increases in average indirect secured consumer loans, average residential mortgage loans, average home equity and average solar energy installation loans, partially offset by a decrease in average other consumer loans. Refer to the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A for information on these fluctuations. Average commercial loans increased $941 million from the year ended December 31, 2024 primarily driven by loan originations exceeding payoffs.
Average deposits increased $1.5 billion from the year ended December 31, 2024 primarily driven by increases in average money market deposits and average demand deposits, partially offset by a decrease in average savings deposits. Average money market deposits increased $1.3 billion from the year ended December 31, 2024 primarily as a result of higher offering rates from promotional offers leading to higher average balances per customer account as well as growth in the number of customer accounts. Average demand deposits increased $762 million from the year ended December 31, 2024 primarily as a result of higher average balances per customer account as well as growth in the number of customer accounts. Average savings deposits decreased $564 million from the year ended December 31, 2024 primarily due to lower average balances per customer account as well as a decrease in the number of customer accounts, partially driven by the impact of consumer preferences for products with higher offering rates.
Wealth and Asset Management
Wealth and Asset Management provides a full range of wealth management solutions for individuals, companies and not-for-profit organizations, including wealth planning, investment management, banking, insurance, trust and estate services. These offerings include retail brokerage services for individual clients, advisory services for institutional clients including middle market businesses, non-profits, states and municipalities, and wealth management strategies and products for high net worth and ultra-high net worth clients.
The following table contains selected financial data for the Wealth and Asset Management segment:
TABLE 17: Wealth and Asset Management
For the years ended December 31 ($ in millions)
Income Statement Data
Net interest income
(Benefit from) provision for credit losses
Noninterest income:
Wealth and asset management revenue
Other noninterest income
Noninterest expense:
Compensation and benefits
Other noninterest expense
Income before income taxes
Average Balance Sheet Data
Loans and leases, including held for sale
Deposits
Income before income taxes was $252 million for the year ended December 31, 2025 compared to $227 million for the year ended December 31, 2024. The increase was primarily driven by an increase in noninterest income, partially offset by an increase in noninterest expense.
Noninterest income increased $27 million from the year ended December 31, 2024 primarily due to an increase in wealth and asset management revenue, which increased $25 million from the year ended December 31, 2024 primarily as a result of an increase in personal asset management revenue.
Noninterest expense increased $7 million from the year ended December 31, 2024 primarily due to increases in compensation and benefits expense and other noninterest expense. Compensation and benefits expense increased $4 million from the year ended December 31, 2024 primarily due to an increase in base compensation. Other noninterest expense increased $3 million from the year ended December 31, 2024 primarily driven by an increase in allocated expenses.
Average loans and leases increased $392 million from the year ended December 31, 2024 primarily driven by increases in average commercial and industrial loans, average other consumer loans and average commercial mortgage loans as loan production exceeded payoffs.
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Average deposits decreased $627 million from the year ended December 31, 2024 primarily driven by decreases in average savings deposits and average interest checking deposits as a result of lower average balances per customer account.
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 $670 million from the year ended December 31, 2024 primarily driven by a decrease in FTP credits on deposits allocated to the segments and a decrease in FTP charges on short-term investments. These positive impacts were partially offset by a decrease in FTP charges on loans and leases allocated to the segments and a decrease in interest income on short-term investments. The decrease in FTP charges allocated to the segments was primarily driven by decreases in market interest rates, primarily affecting the variable-rate asset portfolios. The decrease in FTP credits allocated to the segments was driven by lower FTP credit rates paid on deposits as a result of lower market interest rates and reduced liquidity premium assumptions. Given the daily repricing option on non-maturity deposits, the 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. 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.
The benefit from credit losses was $112 million for the year ended December 31, 2025 compared to $96 million for the year ended December 31, 2024. The increase in the benefit from credit losses for the year ended December 31, 2025 was primarily driven by the reduction of the ACL captured in General Corporate and Other.
Noninterest income increased $77 million from the year ended December 31, 2024 primarily driven by a decrease in the loss recognized on the swap associated with the sale of Visa, Inc. Class B Shares, partially offset by a decrease in commercial payments revenue.
Noninterest expense decreased $14 million from the year ended December 31, 2024 primarily driven by the expense recognized in 2024 associated with the FDIC special assessment and an increase in corporate overhead allocations from General Corporate and Other to the other segments, partially offset by increases in technology and communications expense, donations expense and compensation and benefits expense.
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BALANCE SHEET ANALYSIS
Loans and Leases
The Bancorp classifies its commercial loans and leases based upon primary purpose and consumer loans based upon product or collateral. Table 18 summarizes end of period loans and leases, including loans and leases held for sale, and Table 19 summarizes average total loans and leases, including average loans and leases held for sale.
TABLE 18: Components of Loans and Leases (including loans and leases held for sale)
As of December 31 ($ in millions)
Commercial loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Consumer loans:
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total consumer loans
Total loans and leases
Total portfolio loans and leases (excluding loans and leases held for sale)
Total loans and leases, including loans and leases held for sale, increased $3.0 billion, or 2%, from December 31, 2024 driven by increases in both consumer loans and commercial loans and leases.
Commercial loans and leases increased $278 million from December 31, 2024 primarily due to an increase in commercial and industrial loans, partially offset by a decrease in commercial construction loans. Commercial and industrial loans increased $509 million, or 1%, from December 31, 2024 primarily as a result of loan originations exceeding payoffs. Commercial construction loans decreased $301 million, or 5%, from December 31, 2024 as payoffs exceeded draws on existing commitments and loan originations.
Consumer loans increased $2.7 billion, or 6%, from December 31, 2024 primarily due to increases in indirect secured consumer loans, home equity and solar energy installation loans. Indirect secured consumer loans increased $1.7 billion, or 10%, from December 31, 2024 primarily driven by higher indirect automobile loan production due to strong industry sales volume. Home equity increased $658 million, or 16%, from December 31, 2024 as loan originations and new advances exceeded payoffs, driven by increased marketing efforts. Solar energy installation loans increased $358 million, or 9%, from December 31, 2024 primarily due to loan originations exceeding payoffs.
TABLE 19: Components of Average Loans and Leases (including average loans and leases held for sale)
For the years ended December 31 ($ in millions)
Commercial loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Consumer loans:
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total consumer loans
Total average loans and leases
Total average portfolio loans and leases (excluding loans and leases held for sale)
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Average loans and leases, including average loans and leases held for sale, increased $5.7 billion, or 5%, from December 31, 2024 driven by increases in both average consumer loans and average commercial loans and leases.
Average commercial loans and leases increased $2.7 billion, or 4%, from December 31, 2024 primarily due to increases in average commercial and industrial loans, average commercial mortgage loans and average commercial leases. Average commercial and industrial loans increased $1.7 billion, or 3%, from December 31, 2024 primarily as a result of loan originations exceeding payoffs. Average commercial mortgage loans increased $731 million, or 6%, from December 31, 2024 and included the impact of commercial construction loans transitioning to commercial mortgage loans and increased originations. Average commercial leases increased $468 million, or 17%, from December 31, 2024 primarily driven by an increase in lease originations as a result of a shift in business strategy in the fourth quarter of 2024 that continued into 2025.
Average consumer loans increased $3.0 billion, or 6%, from December 31, 2024 primarily due to increases in average indirect secured consumer loans, average residential mortgage loans, average home equity and average solar energy installation loans, partially offset by a decrease in average other consumer loans. Average indirect secured consumer loans increased $1.8 billion, or 11%, from December 31, 2024 primarily driven by higher indirect automobile loan production during the fourth quarter of 2024 that continued into 2025 due to strong industry sales volume. Average residential mortgage loans increased $657 million, or 4%, from December 31, 2024 primarily driven by an increase in held-for-investment loan originations and loan purchase transactions completed in the second half of 2024. Average home equity increased $489 million, or 12%, from December 31, 2024 as loan originations and new advances exceeded payoffs, driven by increased marketing efforts. Average solar energy installation loans increased $373 million, or 9%, from December 31, 2024 primarily due to loan originations exceeding payoffs. Average other consumer loans decreased $265 million, or 10%, from December 31, 2024 primarily driven by paydowns of point-of-sale loans, including loans originated in connection with one third-party point-of-sale company with which the Bancorp discontinued the origination of new loans in 2022.
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 carrying value of total investment securities, which consist of available-for-sale debt and other securities, held-to-maturity securities, trading debt securities and equity securities, was $49.0 billion and $52.4 billion at December 31, 2025 and 2024, respectively. The taxable available-for-sale debt and other securities portfolio had an effective duration of 3.8 at both December 31, 2025 and 2024. The taxable held-to-maturity securities portfolio had an effective duration of 5.1 and 5.5 at December 31, 2025 and 2024, respectively.
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 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, 2025, the Bancorp’s investment securities portfolio consisted primarily of U.S. Treasury and other government guaranteed securities. The Bancorp held an immaterial amount of below-investment grade available-for-sale debt securities and held-to-maturity securities at both December 31, 2025 and 2024.
At both December 31, 2025 and 2024, 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, 2025, 2024 and 2023.
During the years ended December 31, 2025, 2024 and 2023, the Bancorp recognized an immaterial amount, $21 million and $5 million, respectively, of impairmentlosses on its available-for-sale debt and other securities, included in securities gains, net, in the Consolidated Statements of Income. These losses related to certain securities in unrealized loss positions where the Bancorp had determined that it no longer intended to hold the securities until the recovery of their amortized cost bases.
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The following table summarizes the end of period components of investment securities:
TABLE 20: Components of Investment Securities
As of December 31 ($ in millions)
Available-for-sale debt and other securities (amortized cost basis):
U.S. Treasury and federal agencies securities
Mortgage-backed securities:
Agency residential mortgage-backed securities
Agency commercial mortgage-backed securities
Non-agency commercial mortgage-backed securities
Asset-backed securities and other debt securities
Other securities (a)
Total available-for-sale debt and other securities
Obligations of states and political subdivisions securities
Agency residential mortgage-backed securities
Asset-backed securities and other debt securities
Total trading debt securities
Total equity securities (fair value)
(a) Other securities consist of FHLB, FRB and DTCC restricted stock holdings that are carried at cost.
(b) Includes a discount of $742 and $865 at December 31, 2025 and 2024, respectively, 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 investment 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 $994 million were included in AOCI related to these transferred securities. The unrealized losses that existed on the date of transfer will continue to be reported as a component of AOCI and will be amortized into income over the remaining life of the securities as an adjustment to yield, offsetting the amortization of the discount resulting from the transfer recorded at fair value.
The following table presents the estimated future amortization of unrealized losses related to investment securities transferred from available-for-sale to held-to-maturity. At December 31, 2025, these transferred securities had an estimated weighted-average life of 6.4 years.
TABLE 21: Estimated Amortization of Unrealized Losses on Securities Transferred to Held-to-Maturity
As of December 31, 2025 ($ in millions)
Thereafter
Unamortized portion of unrealized losses
On an amortized cost basis, available-for-sale debt and other securities and held-to-maturity securities comprised 26% and 28% of total interest-earning assets at December 31, 2025 and 2024, respectively. The estimated weighted-average life of the debt securities in the available-for-sale debt and other securities portfolio was 5.1 years and 5.0 years at December 31, 2025 and 2024, respectively. In addition, the debt securities in the available-for-sale debt and other securities portfolio had a weighted-average yield o f 3.09% and 3.08% at December 31, 2025 and 2024, respectively. The held-to-maturity securities portfolio had an estimated weighted-average life of 6.4 years and 6.9 years at December 31, 2025 and 2024, respectively. In addition, the held-to-maturity securities portfolio had a weighted-average yield of 3.50% and 3.41% at December 31, 2025 and 2024, respectively.
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Information presented in Tables 22 and 23 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, and, conversely, increases when interest rates decrease or when credit spreads contract. Total net unrealized losses on the available-for-sale debt and other securities portfolio we re $2.9 billion and $4.3 billion at December 31, 2025 and 2024, respectively.
TABLE 22: Characteristics of Available-for-Sale Debt and Other Securities
As of December 31, 2025 ($ 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
Total
Agency residential mortgage-backed securities:
Average life within one year
Average life after one year through five years
Average life after five years through ten years
Average life after ten years
Total
Agency commercial mortgage-backed securities: (a)
Average life within one year
Average life after one year through five years
Average life after five years through ten years
Average life after ten years
Total
Non-agency commercial mortgage-backed securities:
Average life within one year
Average life after one year through five years
Average life after five years through ten years
Total
Asset-backed securities and other debt securities:
Average life within one year
Average life after one year through five years
Average life after five years through ten years
Average life after ten years
Total
Other securities
Total available-for-sale debt and other securities
(a) Taxable-equivalent yield adjustments included in the above table are 0.04%, 0.09% 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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TABLE 23: Characteristics of Held-to-Maturity Securities
As of December 31, 2025 ($ in millions)
Amortized Cost (b)
Fair Value
Weighted-Average Life
(in years)
Weighted-Average Yield
U.S. Treasury and federal agencies securities:
Average life within one year
Average life after one year through five years
Total
Agency residential mortgage-backed securities:
Average life after five years through ten years
Average life after ten years
Total
Agency commercial mortgage-backed securities: (a)
Average life within one year
Average life after one year through five years
Average life after five years through ten years
Average life after ten years
Total
Asset-backed securities and other debt securities:
Average life after five years through ten years
Total
Total held-to-maturity securities
(a) Taxable-equivalent yield adjustments included in the above table are 0.01%, 0.06%, 0.94% 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 $742 at December 31, 2025 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. Other short-term investments are used as an extension of the investment securities portfolio to manage liquidity risk. Other short-term investments were $18.9 billion at December 31, 2025, an increase of $1.8 billion from December 31, 2024. This increase was primarily associated with growth in core deposits and the strategic decision to manage securities cash flow reinvestment, partially offset by an increase in loans and leases and a reduction in total borrowings during the year ended December 31, 2025.
Deposits
The Bancorp’s deposit balances represent an important source of funding and revenue growth opportunity. The Bancorp continues to focus on core deposit growth in its retail and commercial franchises by improving customer satisfaction, building full relationships and offering competitive rates and through its strategy of expanding retail presence in high-growth markets, such as in the Southeast. Average core deposits represented 77% of average total assets for both the years ended December 31, 2025 and 2024.
The following table presents the end of period components of deposits:
TABLE 24: Components of Deposits
As of December 31 ($ in millions)
Demand
Interest checking
Savings
Money market
Total transaction deposits
CDs $250,000 or less
Total core deposits
CDs over $250,000 (a)
Total deposits
(a) Includes $777 million and $1.3 billion of retail brokered CDs which are fully covered by FDIC insurance as of December 31, 2025 and 2024, respectively.
Core deposits increased $4.9 billion, or 3%, from December 31, 2024 due to an increase in transaction deposits, partially offset by a decrease in CDs $250,000 or less. Transaction deposits increased $5.1 billion, or 3%, from December 31, 2024 driven by increases in money market deposits, interest checking deposits and demand deposits, partially offset by a decrease in savings deposits. Money market deposits increased $2.7 billion, or 7%, from December 31, 2024 primarily as a result of higher offering rates from promotional offers leading to higher balances per consumer customer account as well as growth in the number of consumer customer accounts. Interest checking deposits increased $1.8 billion, or 3%, from December 31, 2024 primarily as a result of higher balances per commercial customer account, partially offset by a
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decrease in derivative collateral held as a result of lower interest rates. Demand deposits increased $1.6 billion, or 4%, from December 31, 2024 primarily as a result of higher balances per customer account as well as growth in the number of consumer customer accounts. Savings deposits decreased $992 million, or 6%, from December 31, 2024 primarily due to lower balances per consumer customer account as well as a decrease in the number of consumer customer accounts, partially driven by the impact of consumer preferences for products with higher offering rates. CDs $250,000 or less decreased $199 million, or 2%, from December 31, 2024 primarily due to lower balances per customer account driven by maturities which outpaced new issuances given current market conditions.
CDs over $250,000 decreased $380 million, or 16%, from December 31, 2024 primarily due to maturities of retail brokered CDs.
The following table presents the components of average deposits for the years ended December 31:
TABLE 25: Components of Average Deposits
($ in millions)
Demand
Interest checking
Savings
Money market
Total transaction deposits
CDs $250,000 or less
Total core deposits
CDs over $250,000 (a)
Total average deposits
(a) Includes $1.1 billion and $3.1 billion of retail brokered CDs which are fully covered by FDIC insurance for the years ended December 31, 2025 and 2024, respectively.
On an average basis, core deposits decreased $323 million from December 31, 2024 primarily due to a decrease in average transaction deposits. Average transaction deposits decreased $351 million from December 31, 2024 driven by decreases in average interest checking deposits and average savings deposits, partially offset by increases in average money market deposits and average demand deposits. Average interest checking deposits decreased $1.3 billion, or 2%, from December 31, 2024 primarily due to lower average balances per customer account as well as a decrease in the number of consumer customer accounts and a decrease in derivative collateral held as a result of lower interest rates. The fluctuations in the average balances of savings deposits, money market deposits and demand deposits were driven by similar factors to those previously discussed with respect to the end of period balances.
Average CDs over $250,000 decreased $1.9 billion, or 46%, from December 31, 2024 primarily due to maturities of retail brokered CDs.
Contractual maturities
The contractual maturities of CDs as of December 31, 2025 are summarized in the following table:
TABLE 26: Contractual Maturities of CDs (a)
($ in millions)
Next 12 months
13-24 months
25-36 months
37-48 months
49-60 months
After 60 months
Total CD s
(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. As of December 31, 2025 and 2024, approximately $101.8 billion, or 59%, and $100.6 billion, or 60%, respectively, of the Bancorp’s domestic deposits were estimated to be insured. As of December 31, 2025 and 2024, approximately $69.8 billion and $66.5 billion, respectively, of the Bancorp’s domestic deposits were estimated to be uninsured. At both December 31, 2025 and 2024, approximately $1.1 billion of time deposits were estimated to be uninsured. Where information is not readily available to determine the amount of insured deposits, the amount of uninsured deposits is estimated, consistent with the methodologies and assumptions utilized in providing information to the Bank’s regulators.
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Borrowings
The Bancorp accesses a variety of short-term and long-term funding sources. Borrowings with original maturities of one year or less are classified as short-term and include federal funds purchased and other short-term borrowings. For further information on the components of short-term borrowings, refer to Note 16 of the Notes to Consolidated Financial Statements. Total average borrowings as a percent of average interest-bearing liabilities was 13% for both the years ended December 31, 2025 and 2024.
The following table summarizes the end of period components of borrowings:
TABLE 27: Components of Borrowings
As of December 31 ($ in millions)
Short-term borrowings
Long-term debt
Total borrowings
Total borrowings decreased $4.5 billion, or 24%, from December 31, 2024 due to decreases in both short-term borrowings and long-term debt. Short-term borrowings decreased $3.7 billion from December 31, 2024 primarily due to a decrease in short-term FHLB advances to manage balance sheet liquidity needs. The level of short-term borrowings and mix of total borrowings can fluctuate significantly from period to period depending on funding needs and the sources that are used to satisfy those needs. Long-term debt decreased $748 million from December 31, 2024 primarily due to redemptions or maturities of $1.5 billion of notes and $396 million of paydowns associated with loan securitizations. These decreases were partially offset by the issuance of $700 million of senior fixed-rate/floating-rate notes and $300 million of floating-rate notes in January 2025 and $113 million of fair value adjustments associated with hedged long-term debt during the year ended December 31, 2025. For additional information regarding the long-term debt issuances, refer to Note 17 of the Notes to Consolidated Financial Statements.
The following table summarizes the components of average borrowings:
TABLE 28: Components of Average Borrowings
For the years ended December 31 ($ in millions)
Short-term borrowings
Long-term debt
Total average borrowings
Total average borrowings increased $82 million due to an increase in average short-term borrowings, partially offset by a decrease in average long-term debt. Average short-term borrowings increased $1.7 billion compared to December 31, 2024 primarily due to an increase in short-term FHLB advances to manage balance sheet liquidity needs. Average long-term debt decreased $1.6 billion compared to December 31, 2024 due to similar factors to those previously discussed with respect to the end of period balances. 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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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 Capital Committee, 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., digital assets, acute weather events, 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 (collectively known as Enterprise Risk Management) and other second line of defense groups, such as 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. Independent 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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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 more frequent 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. These ratings are used by the Bancorp to monitor and manage its credit risk. The first of these risk rating systems is based on and aligns with regulatory guidance for credit risk rating systems. 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 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 eight 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 lossseverity 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 lossseverity 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.
The Bancorp is closely monitoring various economic factors and their impacts on borrowers, including, but not limited to, the impact of policy changes on trade, ongoing global tensions, inflation, interest rates, labor and supply chain issues, market volatility and changes in
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consumer discretionary spending patterns, including debt and default levels. The Bancorp maintains focus on disciplined client selection, adherence to underwriting policy and attention to potential concentrations of risk.
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 provides loans to a variety of customers ranging from large multinational firms to middle market businesses, small businesses, sole proprietors and high net worth individuals. The origination policies for commercial loans and leases outline the risks and underwriting requirements for individuals and 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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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 29: Commercial Loan and Lease Portfolio (excluding loans and leases held for sale)
As of December 31 ($ in millions)
Outstanding
Exposure
Nonaccrual
Outstanding
Exposure
Nonaccrual
By Industry:
Real estate
Financial services and insurance
Manufacturing
Business services
Healthcare
Wholesale trade
Accommodation and food
Retail trade
Communication and information
Construction
Transportation and warehousing
Mining
Utilities
Entertainment and recreation
Other services
Agribusiness
Public administration
Individuals
Total
By Loan Size:
Less than $1 million
$1 million to $5 million
$5 million to $10 million
$10 million to $25 million
$25 million to $50 million
Greater than $50 million
Total
By State:
California
Ohio
Texas
Illinois
Florida
New York
Michigan
Indiana
Georgia
North Carolina
Pennsylvania
Tennessee
South Carolina
Other
Total
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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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 30: Commercial Mortgage Loans Outstanding by LTV, Loans Greater Than $1 Million
As of December 31, 2025 ($ in millions)
LTV > 100%
LTV 80-100%
LTV < 80%
Commercial mortgage owner-occupied loans
Commercial mortgage nonowner-occupied loans
Total
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
Commercial mortgage nonowner-occupied loans
Total
Generally, loans with an LTV greater than 80% are originated with either a compensating SBA guaranty or other structural credit protections.
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 32: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale) (a)
As of December 31, 2025 ($ in millions)
Outstanding
Exposure
Nonaccrual
By State:
Florida
Texas
Illinois
Ohio
California
Michigan
South Carolina
North Carolina
Maryland
New York
All other states
Total
(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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TABLE 33: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale) (a)
As of December 31, 2024 ($ in millions)
Outstanding
Exposure
Nonaccrual
By State:
Florida
Texas
Illinois
Ohio
California
Michigan
South Carolina
North Carolina
Maryland
New York
All other states
Total
(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 $6 million and an immaterial amount for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025 and 2024, $1 million and an immaterial amount, respectively, of the Bancorp’s nonowner-occupied commercial real estate loans were 90 days past due and still accruing.
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 appetite 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. Increases in interest rates cause minimum payments on these products to increase, raising the potential for the environment to be disruptive to some borrowers. 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, as well as other economic factors impacting each customer. 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 increase 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 $470 million of ARM loans will have rate resets during the next twelve months. Underlying characteristics of these borrowers include a weighted-average origination debt-to-income ratio of 34% and weighted-average origination LTV of 72%. Approximately 30% of these loans are expected to experience an increase in rate upon reset. For those borrowers, rates are expected to increase by an average of approximately 2.7%, resulting in an average increase in monthly payment amount of approximately 38%.
Certain residential mortgage products have characteristics that may increase the Bancorp’s credit loss rates in the event of a decline in housing values. These types of mortgage products offered by the Bancorp include loans with high LTVs, multiple loans secured by the same collateral that when combined result in an LTV greater than 80% and interest-only loans. The Bancorp has deemed residential mortgage loans with greater than 80% LTVs and no mortgage insurance as loans that represent a higher level of risk. Approximately 72% of these loans consist of loans originated through the Bancorp’s loan program for doctors.
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The following table provides an analysis of the residential mortgage portfolio loans outstanding by LTV at origination:
TABLE 34: Residential Mortgage Portfolio Loans by LTV at Origination
As of December 31 ($ in millions)
Outstanding
Weighted-Average LTV
Outstanding
Weighted-Average LTV
LTV ≤ 80%
LTV > 80%, with mortgage insurance (a)
LTV > 80%, no mortgage insurance
Total
(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 35: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of December 31, 2025 ($ in millions)
Outstanding
90 Days Past Due and Accruing
Nonaccrual
By State:
Illinois
Ohio
Florida
North Carolina
Indiana
Michigan
Kentucky
All other states
Total
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:
Illinois
Ohio
Florida
North Carolina
Indiana
Michigan
Kentucky
All other states
Total
Net charge-offs on residential mortgage loans with an LTV greater than 80% at origination and no mortgage insurance were immaterial for both the years ended December 31, 2025 and 2024.
Home equity portfolio
The Bancorp’s home equity portfolio of $4.8 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 13% 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 2026 to 2028 and approximately $390 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 Tables 38, 39 and 40. Of the total $4.8 billion of outstanding home equity loans:
• 71% reside within the Bancorp’s Midwest footprint of Ohio, Michigan, Illinois, Indiana and Kentucky as of December 31, 2025;
• 75% of non-delinquent borrowers made at least one payment greater than the minimum payment during the year ended December 31, 2025; and
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• The portfolio had a weighted-average refreshed FICO score of 751 at December 31, 2025.
The Bancorp actively manages lines of credit and makes adjustments in lending limits when it believes it is necessary based on FICO score deterioration and property devaluation. The Bancorp does not routinely obtain appraisals on performing loans to update LTVs after origination. However, the Bancorp monitors the local housing markets by reviewing various home price indices and incorporates the impact of the changing market conditions in its ongoing credit monitoring processes.
The following table provides an analysis of home equity portfolio loans outstanding disaggregated based upon refreshed FICO score:
TABLE 37: Home Equity Portfolio Loans Outstanding by Refreshed FICO Score
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
Senior Liens:
FICO ≤ 659
FICO 660-719
FICO ≥ 720
Total senior liens
Junior Liens:
FICO ≤ 659
FICO 660-719
FICO ≥ 720
Total junior liens
Total
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 38: Home Equity Portfolio Loans Outstanding by LTV at Origination
As of December 31 ($ in millions)
Outstanding
Weighted-Average LTV
Outstanding
Weighted-Average LTV
Senior Liens:
LTV ≤ 80%
LTV > 80%
Total senior liens
Junior Liens:
LTV ≤ 80%
LTV > 80%
Total junior liens
Total
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 39: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of December 31, 2025 ($ in millions)
Outstanding
Exposure
Nonaccrual
By State:
Ohio
Illinois
Michigan
Indiana
Florida
Kentucky
All Other States
Total
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TABLE 40: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of December 31, 2024 ($ in millions)
Outstanding
Exposure
Nonaccrual
By State:
Ohio
Illinois
Michigan
Indiana
Florida
Kentucky
All Other States
Total
The Bancorp has realized net recoveries on home equity loans with an LTV greater than 80% at origination for the years ended December 31, 2025 and 2024 of $1 million and $2 million, respectively.
Indirect secured consumer portfolio
The indirect secured consumer portfolio is comprised of $15.1 billion of automobile loans and $2.9 billion of indirect recreational vehicle, marine, motorcycle and powersport loans as of December 31, 2025. All concentration and guideline changes are monitored monthly to ensure alignment with original credit performance.
The following table provides an analysis of indirect secured consumer portfolio loans outstanding disaggregated based upon FICO score at origination:
TABLE 41: Indirect Secured Consumer Portfolio Loans Outstanding by FICO Score at Origination
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
FICO ≤ 659
FICO 660-719
FICO ≥ 720
Total
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.
The following table provides an analysis of indirect secured consumer portfolio loans outstanding by LTV at origination:
TABLE 42: Indirect Secured Consumer Portfolio Loans Outstanding by LTV at Origination
As of December 31 ($ in millions)
Outstanding
Weighted-Average LTV
Outstanding
Weighted-Average LTV
LTV ≤ 100%
LTV > 100%
Total
At December 31, 2025 and 2024, $26 million and $24 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 $34 million and $40 million for the years ended December 31, 2025 and 2024, respectively.
Credit card portfolio
The credit card portfolio consists of predominantly prime accounts with 98% of balances existing within the Bancorp’s footprint at both December 31, 2025 and 2024. At both December 31, 2025 and 2024, 72% of the outstanding balances were originated through branch-based relationships with the remainder coming from direct mail campaigns and online acquisitions.
Given the variable nature of the credit card portfolio, interest rate increases impact this product and it is regularly monitored to ensure the portfolio remains within the Bancorp’s risk appetite. Recent and expected future decreases in interest rates may lessen these risks moving forward.
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The following table provides an analysis of the Bancorp’s outstanding credit card portfolio disaggregated based upon FICO score at origination as of:
TABLE 43: Credit Card Portfolio Loans Outstanding by FICO Score at Origination
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
FICO ≤ 659
FICO 660-719
FICO ≥ 720
Total
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 December 31, 2025 and 2024, loans originated through the Bancorp’s three largest approved installers represented approximately 22% and 23%, respectively, of total balances outstanding in the solar energy installation loan portfolio. As consumer clean energy tax incentives expired as of December 31, 2025, production in this portfolio is expected to decrease in 2026.
The following table provides an analysis of solar energy installation portfolio loans outstanding by state:
TABLE 44: Solar Energy Installation Portfolio Loans Outstanding by State
As of December 31 ($ in millions)
Outstanding
Nonaccrual
Outstanding
Nonaccrual
By State:
Florida
California
Texas
Arizona
Virginia
Oregon
Colorado
Nevada
New York
Connecticut
All other states
Total
The following table provides an analysis of solar energy installation portfolio loans outstanding disaggregated based upon FICO score at origination:
TABLE 45: Solar Energy Installation Portfolio Loans Outstanding by FICO Score at Origination
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
FICO ≤ 659
FICO 660-719
FICO ≥ 720
Total
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 2022.
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The following table provides an analysis of other consumer portfolio loans outstanding by product type:
TABLE 46: Other Consumer Portfolio Loans Outstanding by Product Type
As of December 31 ($ in millions)
Outstanding
% of Total
Outstanding
% of Total
Other secured
Point-of-sale home improvement
Unsecured
Third-party point-of-sale
Total
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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 47. 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 $867 million at December 31, 2025 compared to $860 million at December 31, 2024. At December 31, 2025, $70 million of nonaccrual loans were held for sale, compared to $7 million at December 31, 2024.
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.65% and 0.71% at December 31, 2025 and 2024, respectively. Nonaccrual loans and leases secured by real estate were 34% of nonaccrual loans and leases as of December 31, 2025 compared to 35% as of December 31, 2024.
Portfolio commercial nonaccrual loans and leases were $427 million at December 31, 2025, a decrease of $29 million from December 31, 2024. Portfolio residential mortgage and consumer nonaccrual loans were $340 million at December 31, 2025, a decrease of $27 million from December 31, 2024. Refer to Table 48 for a rollforward of portfolio nonaccrual loans and leases.
OREO and other repossessed property was $30 million at both December 31, 2025 and 2024. The Bancorp recognized gains of $8 million and losses of $2 million on the transfer, sale or write-down of OREO properties during the years ended December 31, 2025 and 2024, respectively.
During the years ended December 31, 2025 and 2024, approximately $79 million and $64 million, respectively, of interest income would have been recognized if the nonaccrual portfolio loans and leases had been current in accordance with their contractual terms. Although these values help demonstrate the costs of carrying nonaccrual credits, the Bancorp does not expect to recover the full amount of interest as nonaccrual loans and leases are generally carried below their principal balance.
TABLE 47: Summary of Nonperforming Assets and Delinquent Loans and Leases
As of December 31 ($ in millions)
Nonaccrual portfolio loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total nonaccrual portfolio loans and leases (a)
OREO and other repossessed property (c)
Total nonperforming portfolio assets
Nonaccrual loans held for sale
Total nonperforming assets
Total portfolio loans and leases 90 days past due and still accruing:
Commercial and industrial loans
Commercial construction loans
Commercial leases
Residential mortgage loans (b)
Credit card
Total portfolio loans and leases 90 days past due and still accruing
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases
ACL as a percent of nonperforming portfolio loans and leases
ACL as a percent of nonperforming portfolio assets
(a) Includes $21 and $18 of nonaccrual government-insured commercial loans whose repayments are insured by the SBA as of December 31, 2025 and 2024, 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 $195 and $163 as of December 31, 2025 and 2024, respectively. The Bancorp recognized losses of $1 for both the years ended December 31, 2025 and 2024, due to claim denials and curtailments associated with these insured or guaranteed loans.
(c) Includes $12 of branch-related real estate no longer intended to be used for banking purposes at both December 31, 2025 and 2024.
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The following tables provide a rollforward of portfolio nonaccrual loans and leases, by portfolio segment:
TABLE 48: Rollforward of Portfolio Nonaccrual Loans and Leases
For the year ended December 31, 2025 ($ in millions)
Commercial
Residential
Mortgage
Consumer
Total
Balance, beginning of period
Transfers to nonaccrual status
Transfers to accrual status
Transfers to held for sale
Loan paydowns/payoffs
Transfers to OREO
Charge-offs
Draws/other extensions of credit
Balance, end of period
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
Transfers to nonaccrual status
Transfers to accrual status
Transfers to held for sale
Loan paydowns/payoffs
Transfers to OREO
Charge-offs
Draws/other extensions of credit
Balance, end of period
Analysis of Net Loan Charge-offs
Net charge-offs were 60 bps and 45 bps of average portfolio loans and leases for the years ended December 31, 2025 and 2024, respectively. Table 50 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 62 bps during the year ended December 31, 2025, compared to 34 bps during 2024, primarily due to an increase in net charge-offs on commercial and industrial loans of $197 million, which included $178 million resulting from the fraud-related impairment of an asset-backed finance commercial loan, and an increase in net charge-offs on commercial mortgage loans of $21 million.
The ratio of consumer loan net charge-offs as a percent of average portfolio consumer loans decreased to 58 bps during the year ended December 31, 2025, compared to 64 bps during 2024, primarily due to decreases in net charge-offs on other consumer loans and indirect secured consumer loans of $15 million and $8 million, respectively, partially offset by an increase in net charge-offs on solar energy installation loans of $14 million.
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TABLE 50: Summary of Credit Loss Experience
For the years ended December 31 ($ in millions)
Losses charged-off:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans (a)
Total losses charged-off
Recoveries of losses previously charged-off:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans (a)
Total recoveries of losses previously charged-off
Net losses charged-off:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total net losses charged-off
Net losses charged-off as a percent of average portfolio loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total consumer loans
Total net losses charged-off as a percent of average portfolio loans and leases
(a) For the years ended December 31, 2025, 2024 and 2023, the Bancorp recorded $18, $28 and $35, 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
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 the reserve 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 lossseverity 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 lossseverity 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, 2025 and 2024, 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 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.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 2025 ACL
The ACL as of December 31, 2025 decreased $76 million from December 31, 2024 primarily driven by impacts of changes in both the mix and credit quality of the consumer loan portfolio. As of December 31, 2025, the Bancorp’s macroeconomic scenarios included estimates of the expected impacts of changes in economic conditions caused by forecasted interest rates and higher tariffs.
At December 31, 2025, the Bancorp assigned an 80% probability weighting to the Baseline scenario and 10% to each of the Upside and Downside scenarios. The following table provides a range of key macroeconomic factors utilized in the Baseline, Upside and Downside scenarios as of December 31, 2025:
TABLE 51: Key Macroeconomic Factors
Baseline Scenario
Upside Scenario
Downside Scenario
Inflation rate
Average annual real GDP growth rate
Average unemployment rate
Average federal funds rate
10-year U.S. Treasury yield
Credit spread (a)
Annualized change in S&P 500
(a) Represents the difference between Moody’s Baa‑ rated corporate bond yields and U.S. Treasury yields.
The Bancorp’s qualitative adjustments, as an overlay to the quantitative models, resulted in a net increase to the ACL as of December 31, 2025 and these qualitative adjustments decreased from the qualitative factors used in the ACL as of December 31, 2024. 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 adjustment 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. The net decrease in qualitative adjustments reflected modest improvement in both the Bancorp’s and industry data for the office sector.
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 $1.2 billion. This sensitivity calculation only reflects the impact of changing the probability weighting of the scenarios in the quantitative credit loss models and excludes any additional considerations associated with the qualitative component of the ACL that might be warranted if probability weights were adjusted.
The following table provides a rollforward of the Bancorp’s ACL:
TABLE 52: Changes in Allowance for Credit Losses
For the years ended December 31 ($ in millions)
ALLL:
Balance, beginning of period
Losses charged-off (a)
Recoveries of losses previously charged-off (a)
Provision for loan and lease losses
Impact of adoption of ASU 2022-02
Balance, end of period
Reserve for unfunded commitments:
Balance, beginning of period
Provision for (benefit from) the reserve for unfunded commitments
Balance, end of period
(a) For the years ended December 31, 2025, 2024 and 2023, the Bancorp recorded $18, $28 and $35, respectively, in both losses charged-off and recoveries of losses previously charged-off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides an attribution of the Bancorp’s ALLL to portfolio loans and leases:
TABLE 53: Attribution of Allowance for Loan and Lease Losses to Portfolio Loans and Leases
As of December 31 ($ in millions)
Attributed ALLL:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total ALLL
Portfolio loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans (a)
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total portfolio loans and leases
Attributed ALLL as a percent of respective portfolio loans and leases:
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total ALLL as a percent of portfolio loans and leases
Total ACL as a percent of portfolio loans and leases
(a) Includes $106 and $108 of residential mortgage loans measured at fair value at December 31, 2025 and 2024, 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.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 appetite 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 appetite.
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 the attrition and mix shift 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, 2025, 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 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 $500 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 $500 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
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. 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 70%-75% 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 60%-65% 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 interest rate changes. 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
% Change in NII (FTE)
Policy Limit
% Change in NII (FTE)
Policy Limit
Change in Interest Rates (bps)
Months
Months
Months
Months
Months
Months
Months
Months
+200 Ramp over 12 months
+100 Ramp over 12 months
-100 Ramp over 12 months
-200 Ramp over 12 months
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, 2025, 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 year one under the parallel 100 bps ramp decrease driven by an expectation that deposits would reprice faster than earning assets. Meanwhile, projections indicate NII decreases in year one under a 200 bps ramp decrease in interest rates and in year two under falling-rate scenarios, as deposit beta expectations decline, certain deposits reach their floors and assets continue to reprice to lower rates. The changes in the estimated NII sensitivity profile compared to December 31, 2024 were primarily attributable to an improved deposit portfolio composition, reduced deposit beta expectations driven by lower actual interest rates and a reduction in outstanding receive-fixed interest rate swaps partially offset by increases in fixed-rate loans.
Tables 55 and 56 provide the sensitivity of the Bancorp’s estimated NII profile at December 31, 2025 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, 2025:
TABLE 55: Estimated NII Sensitivity Profile at December 31, 2025 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)
Months
Months
Months
Months
+200 Ramp over 12 months
+100 Ramp over 12 months
-100 Ramp over 12 months
-200 Ramp over 12 months
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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, 2025:
TABLE 56: Estimated NII Sensitivity Profile at December 31, 2025 with Deposit Beta Assumptions Changes
% Change in NII (FTE)
Betas 10% Higher (a)
Betas 10% Lower (a)
Change in Interest Rates (bps)
Months
Months
Months
Months
+200 Ramp over 12 months
+100 Ramp over 12 months
-100 Ramp over 12 months
-200 Ramp over 12 months
(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 the 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
Change in Interest Rates (bps)
% Change in EVE
Policy Limit
% Change in EVE
Policy Limit
+200 Shock
+100 Shock
-100 Shock
-200 Shock
The EVE sensitivity is negative in both a +200 bps and +100 bps rising-rate scenario, positive in a -100 bps falling-rate scenario and negative in a -200 bps falling-rate scenario at December 31, 2025. The changes in the estimated EVE sensitivity profile from December 31, 2024 were primarily related to lower market rates and changes in forward interest rate expectations, an increase in core deposit balances, a reduction in notional outstanding of receive-fixed interest rate swaps and the impacts of shorter investment securities portfolio durations, partially offset by the impacts of an increase in fixed-rate loans and reduced wholesale funding.
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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Tables 58 and 59 show all swap positions that are utilized as qualifying hedging instruments 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 used as qualifying hedging instruments in Fifth Third’s asset and liability management activities:
TABLE 58: Summary of Qualifying Hedging Instruments
Weighted-Average
As of December 31, 2025 ($ in millions)
Notional Amount
Fair Value
Remaining Term (years)
Fixed Rate
Interest rate swaps related to C&I loans – cash flow – receive-fixed
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed
Interest rate swaps related to long-term debt – fair value – receive-fixed
Total interest rate swaps
TABLE 59: Summary of Qualifying Hedging Instruments
Weighted-Average
As of December 31, 2024 ($ in millions)
Notional Amount
Fair Value
Remaining Term (years)
Fixed Rate
Interest rate swaps related to C&I loans – cash flow – receive-fixed
Interest rate swaps related to C&I loans – cash flow – receive-fixed – forward starting (a)
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed – forward starting (a)
Interest rate swaps related to long-term debt – fair value – receive-fixed
Total interest rate swaps
(a) Forward starting swaps became effective in January 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.
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.
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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, 2025:
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
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Credit card
Solar energy installation loans
Other consumer loans
Total consumer loans
Total portfolio loans and leases
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, 2025:
TABLE 61: Cash Flows from Portfolio Loans and Leases Occurring After One Year
($ in millions)
Fixed- Rate
Floating/Adjustable-Rate
Commercial and industrial loans
Commercial mortgage loans
Commercial construction loans
Commercial leases
Total commercial loans and leases
Residential mortgage loans
Home equity
Indirect secured consumer loans
Solar energy installation loans
Other consumer loans
Total consumer loans
Total portfolio loans and leases
Residential Mortgage Servicing Rights and Price Risk
The fair value of the residential MSR portfolio was $1.6 billion and $1.7 billion at December 31, 2025 and 2024, respectively. 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, which may include the use of investment securities or derivative instruments. 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 Consolidated Financial Statements for additional information on derivative instruments used for this purpose.
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, 2025 and 2024 was $1.0 billion and $861 million, respectively. The Bancorp also enters into foreign exchange contracts for the benefit of commercial customers to hedge their exposure 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
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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
LIQUIDITY RISK MANAGEMENT
The goal of liquidity risk management is to maintain adequate funds to meet changes in the balance sheet, contractual obligations and risk arising from off-balance-sheet exposures. The mitigation of liquidity risk is accomplished primarily through the management of a granular core deposit base and the utilization of stable, long-term funding sources. The Bancorp maintains a contingency funding plan and liquidity stress testing framework that collectively inform prudent levels of on-balance sheet liquidity in the form of cash and investment securities, along with contingent borrowing capacity at the FHLB and the FRB Discount Window, and outline responses and actions to various liquidity stress events. 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.
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.
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 Board-approved risk appetite. The Bancorp’s ALCO, which includes senior management representatives, monitors and manages liquidity risk within the Board-approved risk appetite and is accountable to the ERMC.
Sources of Funds
Primary sources of funds include revenue from noninterest income, cash flows from loan and lease payments, payments from securities including sales and maturities, the sale or securitization of loans and leases, funds generated by core deposits and the use of wholesale 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 available-for-sale debt and other securities and held-to-maturity securities portfolios had a fair value of $47.6 billion at December 31, 2025. From these portfolios, $8.0 billion in principal and interest payments are expected to be received in the next 12 months and an additional $6.9 billion is expected to be received in the next 13 to 24 months. For further information on the investment securities portfolio, refer to the Investment Securities subsection of the Balance Sheet Analysis section of MD&A.
Asset-driven liquidity is provided by the ability to monetize loans, leases and investment securities through a variety of channels, including repurchase agreements, outright sales, securitizations or pledging to secured borrowing providers. 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. For the year ended December 31, 2025, the Bancorp sold loans and leases totaling $5.4 billion, compared to $4.4 billion for the year ended December 31, 2024. For further information, refer to Note 13 of the Notes to Consolidated Financial Statements.
Core deposits have historically provided a sizable source of relatively stable and low-cost funds. Average core deposits and average shareholders’ equity funded 87% and 86% of the Bancorp’s average total assets for the years ended December 31, 2025 and 2024, 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, 2025. 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.
As of December 31, 2025, the Bank’s global bank note program had a borrowing capacity of $25.0 billion, of which $20.2 billion was available for issuance. On January 28, 2025, the Bank issued and sold, under this program, $700 million of fixed-rate/floating-rate senior notes and $300 million of floating-rate senior notes, as further discussed in Note 17 of the Notes to Consolidated Financial Statements. Additionally, at December 31, 2025, the Bank had approximately $73.7 billion of borrowing capacity available through secured borrowing sources, including the FRB and the FHLB.
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Current Liquidity Position
The Bancorp maintains a strong liquidity profile driven by strong core deposit funding and over $100 billion in readily 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 investment securities 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 routinely executes test trades to ensure operational readiness and market depth associated with its secured funding sources.
As of December 31, 2025, 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 26 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 credit ratings of the Bancorp or the Bank could affect their ability to access the credit markets and increase borrowing costs, thereby adversely impacting their 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.
Credit ratings are summarized in Table 62. The ratings reflect the view of each rating agency on the capacity of the Bancorp and the Bank 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, 2026
Moody’s
Standard and
Poor’s
Fitch
DBRS Morningstar
Fifth Third Bancorp:
Short-term borrowings
No rating
Senior debt
Baa1
BBB+
Subordinated debt
Baa1
BBB
BBB+
Fifth Third Bank, National Association:
Short-term borrowings
Short-term deposit
No rating
No rating
Long-term deposit
No rating
Senior debt
Subordinated debt
BBB+
BBB+
Rating Agency Outlook for Fifth Third Bancorp and Fifth Third Bank, National Association:
Negative
Stable
Stable
Positive
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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, unintentionalfailure to comply with applicable laws and regulations, poor design or delivery of products and services, model limitations or misapplication, 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 annual 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 of operational controls, and escalates control issues to senior management and the Board of Directors, as needed. The Operational Risk Committee is the key committee that oversees and supports Fifth Third in the management of operational risk across the enterprise. The Technology and 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.
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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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CAPITAL MANAGEMENT
Management regularly reviews 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 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, refer to Note 29 of the Notes to Consolidated Financial Statements.
The following table presents the actual ratios and amounts for the Bancorp and Bank as of December 31:
TABLE 63: Regulatory Capital
($ in millions)
Ratio
Amount
Ratio
Amount
Ratio
Amount
CET1 risk-based capital:
Fifth Third Bancorp
Fifth Third Bank, National Association
Tier 1 risk-based capital:
Fifth Third Bancorp
Fifth Third Bank, National Association
Total risk-based capital:
Fifth Third Bancorp
Fifth Third Bank, National Association
Leverage:
Fifth Third Bancorp
Fifth Third Bank, National Association
Total risk-weighted assets:
Fifth Third Bancorp
Fifth Third Bank, National Association
Quarterly average assets for leverage: (b)
Fifth Third Bancorp
Fifth Third Bank, National Association
(a) Regulatory capital ratios and amounts as of December 31, 2024 and 2023 were calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital. This has been fully phased in as of January 1, 2025.
(b) Quarterly average assets are a component of the leverage ratio and, for this purpose, do not include goodwill or any other assets that the U.S. banking agencies determine should be deducted from Tier 1 capital.
The following table presents additional capital ratios of the Bancorp as of December 31:
TABLE 64: Additional Capital Ratios
Average total Bancorp shareholders’ equity as a percent of average assets
Tangible equity as a percent of tangible assets (a)(b)
Tangible common equity as a percent of tangible assets (a)(b)
(a) These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
(b) Excludes AOCI.
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 stress capital buffer requirement. Under the Enhanced Prudential Standards tailoring rules, the Bancorp was subject to Category IV standards as of December 31, 2025, 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 supervisory stress tests every two years. The Bancorp was not subject to the 2025 supervisory stress test conducted by the FRB, but submitted the Board-approved capital plan and information contained in Schedule C - Regulatory Capital Instruments, as required, by the April 5, 2025 deadline.
Redemption of Preferred Stock
On September 30, 2025, the Bancorp redeemed all 14,000 outstanding shares of its 4.500% fixed-rate reset non-cumulative perpetual preferred stock, Series L, and the corresponding depositary shares, pursuant to its terms and conditions. Refer to Note 24 of the Notes to Consolidated Financial Statements for additional information on the redemption of preferred stock .
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Dividend Policy and Stock Repurchase Program
The Bancorp’s common stock dividend policy and stock repurchase program reflect 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 $1.54, $1.44 and $1.36 during the years ended December 31, 2025, 2024 and 2023, respectively.
On June 13, 2025, the Bancorp’s Board of Directors authorized management 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. The authorization did not include specific targets or an expiration date. This share repurchase authorization replaced the Board’s previous authorization pursuant to which approximately 12 million shares remained available for repurchase by the Bancorp. The Bancorp entered into and settled a number of accelerated share repurchase transactions during the years ended December 31, 2025 and 2024. After entering into a definitive merger agreement on October 5, 2025 to acquire Comerica Incorporated, the Bancorp announced that it would pause share repurchase activity until after the acquisition closes. Refer to Note 24 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 65: Share Repurchases
For the years ended December 31
Shares authorized for repurchase at January 1
Additional authorizations
Share repurchases (a)
Shares authorized for repurchase at December 31
Average price paid per share (a)
(a) Excludes 1,723,786 and 1,866,182 shares repurchased during the years ended December 31, 2025 and 2024, 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.
