10-QPeriod: Q2 FY2024

FIFTH THIRD BANCORP Quarterly Report for Q2 Ended Jun 30, 2024

Filed August 6, 2024For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported a slight decrease in net income available to common shareholders for the second quarter of 2024 compared to the same period in the prior year, driven by lower net interest income on an FTE basis. This was primarily attributed to higher funding costs and deposit migration into higher-yielding products, although this was partially offset by increased yields on loans and securities. The provision for credit losses significantly decreased year-over-year, reflecting an improvement in the economic forecast and lower period-end loan balances. Noninterest income saw a decline, mainly due to lower leasing business revenue and mortgage banking net revenue, partially offset by growth in wealth and asset management revenue. Noninterest expense remained relatively flat year-over-year. The company also announced settlements with the CFPB totaling $20 million related to consumer sales incentives and auto lending practices. Capital ratios remain strong, exceeding regulatory requirements. Subsequent to quarter-end, FITB entered into another accelerated share repurchase agreement for $200 million.

Financial Highlights

39 data points
Beta

Revenue

$156.00M

Net Income

$601.00M

385.3% Net Margin

EPS (Diluted)

$0.81

Total Assets

$213.26B

Cash & Equivalents

$2.84B

Free Cash Flow

$588.00M

Financial Statements
Beta
Revenue$156.00M
Net Income$601.00M
EPS (Basic)$0.82
EPS (Diluted)$0.81
Shares Outstanding (Basic)686.78M
Shares Outstanding (Diluted)691.08M

Key Highlights

  • 1Net income available to common shareholders was $561 million ($0.81 per diluted share) for Q2 2024, down slightly from $562 million ($0.82 per diluted share) in Q2 2023.
  • 2Net interest income on an FTE basis decreased by 5% to $1.39 billion in Q2 2024 compared to $1.46 billion in Q2 2023, primarily due to higher funding costs.
  • 3Provision for credit losses decreased by 45% to $97 million in Q2 2024 from $177 million in Q2 2023, reflecting improved economic forecasts.
  • 4Noninterest income decreased by 4% to $695 million in Q2 2024 from $726 million in Q2 2023, driven by lower mortgage banking and leasing revenues.
  • 5Noninterest expense was flat year-over-year at $1.22 billion for Q2 2024.
  • 6The Bancorp reached settlements with the CFPB, agreeing to pay $15 million for consumer sales incentive practices and $5 million for auto lending practices.
  • 7Regulatory capital ratios remain strong, with the CET1 capital ratio at 10.62% as of June 30, 2024.

Frequently Asked Questions

Net interest income on an FTE basis decreased by 5% to $1.39 billion in Q2 2024 compared to $1.46 billion in Q2 2023. This decrease was primarily driven by higher funding costs due to increases in market interest rates and deposit balance migration into higher-yielding products. These factors were partially offset by increases in yields on average loans and leases and average taxable securities.

Fifth Third Bancorp agreed to resolve litigation with the CFPB concerning consumer sales incentives and auto lending practices. The settlements involve a $15 million civil penalty related to consumer sales incentives and maintaining existing policies, along with a $5 million civil penalty related to collateral protection insurance on certain auto loans. The company also agreed to provide remediation plans for certain customers in both instances.

Fifth Third Bancorp maintained strong capital ratios. As of June 30, 2024, the CET1 capital ratio was 10.62%, the Tier 1 risk-based capital ratio was 11.93%, the Total risk-based capital ratio was 13.95%, and the Leverage ratio was 9.07%. These ratios exceed regulatory minimums and the Bancorp's stress capital buffer requirement. Additionally, subsequent to the quarter-end, the Bancorp entered into a $200 million accelerated share repurchase transaction.

Noninterest income decreased by 4% to $695 million in Q2 2024 compared to $726 million in Q2 2023. This decline was primarily due to decreases in leasing business revenue and mortgage banking net revenue, partly offset by increases in wealth and asset management revenue and service charges on deposits. Noninterest expense remained flat year-over-year at $1.22 billion, with increases in compensation and benefits and marketing expense offset by decreases in leasing business expense and other noninterest expense.