FIFTH THIRD BANCORP

Previous wording

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. At March 31, 2024, the Bancorp had $215 billion in assets and operated 1,070 full-service banking centers and 2,082 Fifth Third branded ATMs in eleven states throughout the Midwestern and Southeastern regions of the U.S. The Bancorp reports on three business segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset Management.

Current wording

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. At June 30, 2024, the Bancorp had $213 billion in assets and operated 1,070 full-service banking centers and 2,067 Fifth Third branded ATMs in eleven states throughout the Midwestern and Southeastern regions of the U.S. The Bancorp reports on three business segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset Management.

Previous wording

The Bancorp’s revenues are dependent on both net interest income and noninterest income. For the three months ended March 31, 2024, net interest income on an FTE basis and noninterest income provided 66% and 34% of total revenue, respectively. The Bancorp derives the majority of its revenues within the U.S. from customers domiciled in the U.S. Revenue from foreign countries and external customers domiciled in foreign countries was immaterial to the Condensed Consolidated Financial Statements for the three months ended March 31, 2024. 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.

Current wording

The Bancorp’s revenues are dependent on both net interest income and noninterest income. For the three months ended June 30, 2024, net interest income on an FTE basis and noninterest income provided 67% and 33% of total revenue, respectively. For the six months ended June 30, 2024, net interest income on an FTE basis and noninterest income provided 66% and 34% of total revenue, respectively. The Bancorp derives the majority of its revenues within the U.S. from customers domiciled in the U.S. Revenue from foreign countries and external customers domiciled in foreign countries was immaterial to the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2024. 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.

Previous wording

With economic growth above the long-term trend and unemployment below 4%, returning inflation to 2% on a sustained basis may take longer than previously expected. In response to persistent inflationary pressures, FRB officials have signaled that a longer period of restrictive monetary policy may be necessary to return inflation to 2% on a sustained basis. The FRB will continue to monitor the cumulative economic effects of their policy actions, including tighter credit conditions for households and businesses, when determining future monetary actions. Financial markets continue to anticipate interest rate cuts later this year, although the timing and magnitude remains uncertain.

Current wording

With inflation trending down and employment growth softening, FRB officials have signaled that rate cuts are possible in the second half of 2024. The FRB will continue to monitor the cumulative economic effects of their policy actions, including tighter credit conditions for households and businesses, when determining future monetary actions. Financial markets continue to anticipate interest rate cuts later this year, although the timing and magnitude remains uncertain.

Previous wording

The bank failures that occurred in the first half of 2023 generated significant market volatility and increased regulatory and market focus on the liquidity, asset-liability management and unrealized securities losses of banks. In response to these failures, the U.S. banking agencies have proposed a number of regulatory amendments to improve the stability of U.S. banking institutions. Among these amendments, in November 2023, the FDIC issued a final rule for a special deposit insurance assessment on banking organizations with greater than $5 billion in assets to recover the costs associated with protecting uninsured depositors following these closures. The Bancorp’s initial estimate of its allocated share of the special assessment under the provisions of the final rule was $224 million, which was recognized in earnings upon issuance of the final rule in November 2023. During the first quarter of 2024, the FDIC announced that it expected to incur additional losses related to these bank closures beyond its initial estimates. These incremental losses, if incurred, would result in an increase to the amount of the special assessment allocated to each member bank. As a result of this announcement, in the first quarter of 2024, the Bancorp recorded an incremental liability and expense of $33 million associated with the special assessment. The special assessment will be paid to the FDIC over an anticipated total of eight quarterly assessment periods beginning with the first quarter of 2024. The estimate of the cost associated with protecting the uninsured depositors will continue to be subject to periodic adjustment until the final loss is determined upon the termination of the receiverships by the FDIC.

Current wording

In response to the bank closures that occurred in the first half of 2023, the FDIC issued a final rule for a special deposit insurance assessment on banking organizations with greater than $5 billion in assets to recover the losses to the Deposit Insurance Fund associated with protecting uninsured depositors. The Bancorp’s initial estimate of its allocated share of the special assessment under the provisions of the final rule was $224 million, which was recognized in earnings upon issuance of the final rule in November 2023.

Previous wording

On January 29, 2024, the Bancorp issued and sold $1.0 billion of fixed-rate/floating-rate senior notes which will mature on January 29, 2032. The senior notes will bear interest at a rate of 5.631% per annum to, but excluding, January 29, 2031. From, and including January 29, 2031 until, but excluding January 29, 2032, the senior notes will bear interest at a rate of compounded SOFR plus 1.840%. Refer to Note 15 of the Notes to Condensed Consolidated Financial Statements for more information.

Current wording

On January 29, 2024, the Bancorp issued and sold $1.0 billion of fixed-rate/floating-rate senior notes which will mature on January 29, 2032. The senior notes will bear interest at a rate of 5.631% per annum until January 28, 2031. From January 29, 2031 until maturity, the senior notes will bear interest at a rate of compounded SOFR plus 1.840%. Refer to Note 15 of the Notes to Condensed Consolidated Financial Statements for more information.

Previous wording

(a)Amounts presented on an FTE basis. The FTE adjustments were $6 and $5 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(a)Amounts presented on an FTE basis. The FTE adjustments were $6 for both the three months ended June 30, 2024 and 2023 and were $12 and $11 for thesix months ended June 30, 2024 and 2023, respectively.

Previous wording

The Bancorp’s net income available to common shareholders for the first quarter of 2024 was $480 million, or $0.70 per diluted share, which was net of $40 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the first quarter of 2023 was $535 million, or $0.78 per diluted share, which was net of $23 million in preferred stock dividends.

Current wording

The Bancorp’s net income available to common shareholders for the second quarter of 2024 was $561 million, or $0.81 per diluted share, which was net of $40 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the second quarter of 2023 was $562 million, or $0.82 per diluted share, which was net of $39 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the six months ended June 30, 2024 was $1.0 billion, or $1.51 per diluted share, which was net of $81 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the six months ended June 30, 2023 was $1.1 billion, or $1.59 per diluted share, which was net of $62 million in preferred stock dividends.

Previous wording

Net interest income on an FTE basis (non-GAAP) was $1.4 billion for the three months ended March 31, 2024, a decrease of $132 million compared to the same period in the prior year. Net interest income was negatively impacted by higher funding costs due to increases in market interest rates and deposit balance migration into higher yielding products. Rates paid on average interest-bearing core deposits and average long-term debt increased 124 bps and 103 bps, respectively, for the three months ended March 31, 2024 compared to the same period in the prior year. The deposit balance migration impacting net interest income resulted in decreases in the average balances of demand deposits of $9.9 billion and increases in the average balances of interest-bearing core deposits of $16.2 billion for the three months ended March 31, 2024 compared to the same period in the prior year. Additionally, net interest income was negatively impacted by a decrease in the average balances of commercial and industrial loans of $4.9 billion and an increase in the average balances of long-term debt of $2.0 billion for the three months ended March 31, 2024 compared to the same period in the prior year. These negative impacts were partially offset by increases in yields of 73 bps on average loans and leases and 20 bps on average taxable securities for the three months ended March 31, 2024 compared to the same period in the prior year. Net interest income also benefited from an increase in average other short-term investments of $15.9 billion for the three months ended March 31, 2024 compared to the same period in the prior year.

Current wording

Net interest income on an FTE basis (non-GAAP) was $1.4 billion and $2.8 billion for the three and six months ended June 30, 2024, respectively, decreasing $70 million and $202 million compared to the same periods in the prior year. Net interest income was negatively impacted by higher funding costs due to increases in market interest rates and deposit balance migration into higher yielding products. Rates paid on average interest-bearing core deposits and average long-term debt increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year. The deposit balance migration impacting net interest income contributed to decreases in the average balances of demand deposits and increases in the average balances of interest-bearing core deposits for the three and six months ended June 30, 2024 compared to the same periods in the prior year. Additionally, net interest income was negatively impacted by decreases in the average balances of commercial and industrial loans and increases in the average balances of long-term debt for the three and six months ended June 30, 2024 compared to the same periods in the prior year. These negative impacts on net interest income were partially offset by increases in yields on average loans and leases and average taxable securities for the three and six months ended June 30, 2024 compared to the same periods in the prior year. Net interest income for the three and six months ended June 30, 2024 also benefited from increases in the average balances of other short-term investments and decreases in the average balances of FHLB advances for the three and six months ended June 30, 2024 compared to the same periods in the prior year. Net interest income for the six months ended June 30, 2024 was also positively impacted by an increase in the average balances of solar energy installation loans compared to the same period in the prior year. Net interest margin on an FTE basis (non-GAAP) was 2.88% and 2.87% for the three and six months ended June 30, 2024, respectively, compared to 3.10% and 3.20% for the comparable periods in the prior year.

Previous wording

The provision for credit losses was $94 million and $164 million for the three months ended March 31, 2024 and 2023, respectively. Provision expense for the three months ended March 31, 2024 was affected by factors which caused a slight decrease in the ACL from December 31, 2023, including improvement in the economic forecasts used to calculate the ACL and lower period-end loan and lease balances, partially offset by increases in specific reserves on individually evaluated commercial loans. Provision expense for the three months ended March 31, 2023 was driven by factors which caused an increase in the ACL from December 31, 2022, including growth in period-end loan and lease balances and increases to specific reserves on individually evaluated commercial loans. Net losses charged off as a percent of average portfolio loans and leases were 0.38% and 0.26% for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024 and December 31, 2023, nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.64% and 0.59%, respectively. For more information 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 Condensed Consolidated Financial Statements.

Current wording

The provision for credit losses was $97 million and $191 million for the three and six months ended June 30, 2024, respectively, compared to $177 million and $341 million during the same periods in the prior year. Provision expense for the three months ended June 30, 2024 was affected by factors that caused a decrease in the ACL from March 31, 2024, primarily including decreases in specific reserves on individually evaluated commercial and industrial loans. The provision for credit losses for the six months ended June 30, 2024 was affected by factors that caused a decrease in the ACL from December 31, 2023, including improvement in the economic forecast used to calculate the ACL and lower period-end loan and lease balances. Net losses charged-off as a percent of average portfolio loans and leases were 0.49% and 0.29% for the three months ended June 30, 2024 and 2023, respectively, and 0.44% and 0.27% for the six months ended June 30, 2024 and 2023, respectively. At June 30, 2024 and December 31, 2023, nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.55% and 0.59%, respectively. For more information 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 Condensed Consolidated Financial Statements.

Previous wording

•Tier 1 risk-based capital ratio: 11.77%;

Current wording

•Tier 1 risk-based capital ratio: 11.93%;

Previous wording

•Total risk-based capital ratio: 13.81%;

Current wording

•Total risk-based capital ratio: 13.95%;

Previous wording

The Bancorp’s Condensed 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, fair value measurements, goodwill and legal contingencies. These accounting policies are discussed in detail in the Critical Accounting Policies section of the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the valuation techniques or models during the three months ended March 31, 2024.

Current wording

The Bancorp’s Condensed 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, fair value measurements, goodwill and legal contingencies. These accounting policies are discussed in detail in the Critical Accounting Policies section of the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the valuation techniques or models during the six months ended June 30, 2024.

Previous wording

Table 5 presents the components of net interest income, net interest margin and net interest rate spread for the three months ended March 31, 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.

Current wording

Tables 5 and 6 present the components of net interest income, net interest margin and net interest rate spread for the three and six months ended June 30, 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.

Previous wording

market interest rates and deposit balance migration into higher yielding products. Rates paid on average interest-bearing core deposits and average long-term debt increased for the three months ended March 31, 2024 compared to the same period in the prior year. The deposit balance migration impacting net interest income resulted in decreases in the average balances of demand deposits and increases in the average balances of interest-bearing core deposits for the three months ended March 31, 2024 compared to the same period in the prior year. Additionally, net interest income was negatively impacted by a decrease in the average balances of commercial and industrial loans and an increase in the average balances of long-term debt for the three months ended March 31, 2024 compared to the same period in the prior year. These negative impacts were partially offset by increases in yields on average loans and leases and average taxable securities for the three months ended March 31, 2024 compared to the same period in the prior year. Net interest income also benefited from an increase in average other short-term investments for the three months ended March 31, 2024 compared to the same period in the prior year. Net interest margin on an FTE basis (non-GAAP) was 2.86% for the three months ended March 31, 2024 compared to 3.29% for the same period in the prior year.

Current wording

Net interest income on an FTE basis (non-GAAP) was $1.4 billion and $2.8 billion for the three and six months ended June 30, 2024, respectively, decreasing $70 million and $202 million compared to the same periods in the prior year. Net interest income was negatively impacted by higher funding costs due to increases in market interest rates and deposit balance migration into higher yielding products. Rates paid on average interest-bearing core deposits increased 76 bps and 100 bps, respectively, and rates paid on average long-term debt increased 66 bps and 84 bps, respectively, for the three and six months ended June 30, 2024 compared to the same periods in the prior year. The deposit balance migration impacting net interest income contributed to decreases in the average balances of demand deposits of $6.3 billion and $8.1 billion, respectively, and increases in the average balances of interest-bearing core deposits of $13.2 billion and $14.7 billion, respectively, for the three and six months ended June 30, 2024 compared to the same periods in the prior year. Additionally, net interest income was negatively impacted by decreases in the average balances of commercial and industrial loans of $5.8 billion and $5.4 billion, respectively, and increases in the average balances of long-term debt of $2.8 billion and $2.4 billion, respectively, for the three and six months ended June 30, 2024 compared to the same periods in the prior year.

Previous wording

Net interest rate spread on an FTE basis (non-GAAP) was 2.02% for the three months ended March 31, 2024 compared to 2.62% for the same period in the prior year. Rates paid on average interest-bearing liabilities increased 118 bps, partially offset by a 58 bps increase in yields on average interest-earning assets for the three months ended March 31, 2024 compared to same period in the prior year.

Current wording

Net interest rate spread on an FTE basis (non-GAAP) was 2.04% for both the three and six months ended June 30, 2024, compared to 2.32% and 2.46% for the three and six months ended June 30, 2023, respectively. Rates paid on average interest-bearing liabilities increased 67 bps and 91 bps, partially offset by increases in yields on average interest-earning assets of 39 bps and 49 bps for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023.

Previous wording

Net interest margin on an FTE basis (non-GAAP) was 2.86% for the three months ended March 31, 2024 compared to 3.29% for the comparable period in the prior year. Net interest margin for the three months ended March 31, 2024 was negatively impacted by the migration of average balances of deposits from demand deposits to interest-bearing deposits, increases in rates paid on and average balances of wholesale funding and decreases in average balances of loans and leases, partially offset by higher market interest rates on interest-earning assets and growth in average balances of other short-term investments. Net interest margin results are expected to modestly increase over the next several quarters driven by fixed-rate asset repricing and deposit growth, partially offset by the impact of continued deposit margin compression. However, net interest margin may be negatively impacted by increased deposit competition or higher levels of cash and other short-term investments.

Current wording

Net interest margin on an FTE basis (non-GAAP) was 2.88% and 2.87% for the three and six months ended June 30, 2024, respectively, compared to 3.10% and 3.20%for the comparable periods in the prior year. Net interest margin for the three and six months ended June 30, 2024 was negatively impacted by the migration of average balances of deposits from demand deposits to interest-bearing deposits, increases in rates paid on core deposits and wholesale funding and decreases in average balances of loans and leases, partially offset by higher market interest rates on interest-earning assets and growth in average balances of other short-term investments. Net interest margin results are expected to modestly increase over the next several quarters driven by fixed-rate asset repricing and deposit growth, partially offset by the

Previous wording

Interest income on an FTE basis (non-GAAP) from loans and leases increased $146 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the previously mentioned increases in market interest rates, partially offset by a decrease in average balances of commercial and industrial loans. For more information on the Bancorp’s loan and lease portfolio, refer to the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A. Interest income on an FTE basis (non-GAAP) from investment securities and other short-term investments increased$250 million during the three months ended March 31, 2024

Current wording

Interest income on an FTE basis (non-GAAP) from loans and leases increased $41 million and$187 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily driven by the previously mentioned increases in yields on loans and leases, partially offset by decreases in average balances of commercial and industrial loans. The increase for the six months ended June 30, 2024 was also driven by the previously mentioned increase in the average balances of solar energy installation loans. For more information on the Bancorp’s loan and lease portfolio, refer to the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A. Interest income on an FTE basis (non-GAAP) from investment securities and other short-term investments increased$209 million and $459 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to the previously mentioned increases in the average balances of other short-term investments and increases in yields on average taxable securities.

Previous wording

Interest expense on average core deposits increased $448 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to the previously mentioned increase in the cost of average interest-bearing core deposits to 291 bps for the three months ended March 31, 2024 from 167 bps for the three months ended March 31, 2023, as a result of higher short-term interest rates and greater competition for deposits. Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s deposits.

Current wording

Interest expense on average core deposits increased $303 million and $751 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to the previously mentioned increases in the cost of average interest-bearing core deposits to 295 bps and 293 bps for the three and six months ended June 30, 2024, respectively, from 219 bps and 193 bps for the three and six months ended June 30, 2023, respectively, as a result of higher short-term interest rates and greater competition for deposits. The increases for the three and six months ended June 30, 2024 were also driven by the previously mentioned increases in the average balances of interest-bearing core deposits. Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s deposits.

Previous wording

Interest expense on average wholesale funding increased$80 millionfor the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to the previously mentioned increases in rates paid on and average balances of long-term debt. The increase for the three months ended March 31, 2024 was also driven by an increase in the average balances of CDs over $250,000 of $1.2 billion and an increase in the rates paid on average CDs over $250,000 of 107 bps. These negative impacts were partially offset by a decrease in the average balances of FHLB advances of $1.7 billion. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s borrowings. During the three months ended March 31, 2024, average wholesale funding represented 17% of average interest-bearing liabilities compared to 18% for the three months ended March 31, 2023. For more information on the Bancorp’s interest rate risk management, including estimated earnings sensitivity to changes in market interest rates, refer to the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A.

Current wording

Interest expense on average wholesale funding increased$17 million and $97 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to the previously mentioned increases in average balances of and rates paid on long-term debt, partially offset by decreases in average balances of FHLB advances. The increase for the six months ended June 30, 2024 was also driven by increases in the rates paid on average CDs over $250,000 and average FHLB advances of 83 bps and 81 bps, respectively. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s borrowings. Average wholesale funding represented 17% of average interest-bearing liabilities during both the three and six months ended June 30, 2024, compared to 19% for both the three and six months ended June 30, 2023. For more information on the Bancorp’s interest rate risk management, including estimated earnings sensitivity to changes in market interest rates, refer to the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A.

Previous wording

(b)The FTE adjustments included in the above table were $6 and $5 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(b)The FTE adjustments included in the above table were $6 for both the three months ended June 30, 2024 and 2023.

Previous wording

The provision for credit losses was $94 million and $164 million for the three months ended March 31, 2024 and 2023, respectively. Provision expense for the three months ended March 31, 2024 was affected by factors which caused a slight decrease in the ACL from December 31, 2023, including improvement in the economic forecasts used to calculate the ACL and lower period-end loan and lease balances, partially offset by increases in specific reserves on individually evaluated commercial loans. Provision expense for the three months ended March 31, 2023 was driven by factors which caused an increase in the ACL from December 31, 2022, including growth in period-end loan and lease balances and increases to specific reserves on individually evaluated commercial loans.

Current wording

The provision for credit losses was $97 million and $191 million for the three and six months ended June 30, 2024, respectively, compared to $177 million and $341 million during the same periods in the prior year. Provision expense for the three months ended June 30, 2024 was affected by factors that caused a decrease in the ACL from March 31, 2024, primarily including decreases in specific reserves on individually evaluated commercial and industrial loans. The provision for credit losses for the six months ended June 30, 2024 was affected by factors that caused a decrease in the ACL from December 31, 2023, including improvement in the economic forecast used to calculate the ACL and lower period-end loan and lease balances.

Previous wording

The ALLL decreased $4 million from December 31, 2023 to $2.3 billion at March 31, 2024. At March 31, 2024, the ALLL as a percent of portfolio loans and leases increased to 1.99%, compared to 1.98% at December 31, 2023. The reserve for unfunded commitments decreased $12 million from December 31, 2023 to $154 million at March 31, 2024. The ACL as a percent of portfolio loans and leases was 2.12% at both March 31, 2024 and December 31, 2023.

Current wording

The ALLL decreased $34 million from December 31, 2023 to $2.3 billion at June 30, 2024. At June 30, 2024, the ALLL as a percent of portfolio loans and leases decreased to 1.96%, compared to 1.98% at December 31, 2023. The reserve for unfunded commitments decreased $29 million from December 31, 2023 to $137 million at June 30, 2024. At June 30, 2024, the ACL as a percent of portfolio loans and leases decreased to 2.08%, compared to 2.12% at December 31, 2023.

Previous wording

Wealth and asset management revenue increased $15 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily driven by increases in personal asset management revenue and broker income. The Bancorp’s trust and registered investment advisory businesses had approximately $634 billion and $542 billion in total assets under care as of March 31, 2024 and 2023, respectively, and managed $62 billion and $57 billion in assets for individuals, corporations and not-for-profit organizations as of March 31, 2024 and 2023, respectively.

Current wording

Wealth and asset management revenue increased $16 million and $31 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily driven by increases in personal asset management revenue and brokerage income. The Bancorp’s trust and registered investment advisory businesses had approximately $631 billion and $554 billion in total assets under care as of June 30, 2024 and 2023, respectively, and managed $65 billion and $59 billion in assets for individuals, corporations and not-for-profit organizations as of June 30, 2024 and 2023, respectively.

Previous wording

Service charges on deposits increased $14 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in service charges on commercial deposits. Service charges on commercial deposits were $112 million for the three months ended March 31, 2024, an increase of $12 million from the three months ended March 31, 2023 primarily due to an increase in revenue from commercial payments activities, which include traditional treasury management and embedded payments. Service charges on

Current wording

Service charges on deposits increased $12 million and $25 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to increases in service charges on commercial deposits. Service charges on commercial deposits were $118 million and $230 million for the three and six months ended June 30, 2024, respectively, increasing $13 million and $25 million from the same periods in the prior year, primarily due to increases in revenue from commercial payments activities, which include traditional treasury management and embedded payments. Service charges on consumer deposits were $38 million and $76

Previous wording

Commercial banking revenue decreased $18 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily driven by decreases in revenue from commercial customer derivatives, merger and acquisition fees and loan syndication fees, partially offset by an increase in corporate bond fees.

Current wording

Commercial banking revenue decreased $2 million and $19 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily driven by decreases in revenue from commercial customer derivatives and loan syndication fees, partially offset by an increase in corporate bond fees. The decrease for the three months ended June 30, 2024 was also partially offset by an increase in merger and acquisition fees.

Previous wording

Card and processing revenue increased $2 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to increases in credit and debit card interchange and electronic funds transfer income, partially offset by increased reward costs.

Current wording

Card and processing revenue increased $2 million and $4 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to an increase in electronic funds transfer income. The increase for the six months ended June 30, 2024 also included an increase in credit and debit card interchange, partially offset by increased reward costs.

Previous wording

Origination fees and gains on loan sales decreased $4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily driven by lower volumes of residential mortgage loan originations as well as a decrease in mark-to-market gains recognized on held for investment loans measured at fair value. Residential mortgage loan originations decreased to $1.1 billion for the three months ended March 31, 2024 from $1.4 billion for the three months ended March 31, 2023 primarily due to the impact of higher market interest rates on originations.

Current wording

Origination fees and gains on loan sales decreased $4 million and $8 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily driven by lower volumes of residential mortgage loan originations. Residential mortgage loan originations decreased to $1.6 billion and $2.7 billion for the three and six months ended June 30, 2024, respectively, from $1.7 billion and $3.1 billion for the three and six months ended June 30, 2023, respectively, primarily due to the impact of higher market interest rates on originations.

Previous wording

The Bancorp recognized income of $8 million for the three months ended March 31, 2024 and losses of $53 million for the three months ended March 31, 2023 in mortgage banking net revenue for valuation adjustments on the MSR portfolio. The valuation adjustments on the MSR portfolio included an increase of $41 million and a decrease of $19 million for the three months ended March 31, 2024 and 2023, respectively, due to changes in market rates and other inputs in the valuation model, including future prepayment speeds and OAS assumptions. Mortgage rates increased slightly during the three months ended March 31, 2024, which caused a decrease in prepayment speeds. The fair value of the MSR portfolio decreased $33 million and $34 million as a result of contractual principal payments and actual prepayment activity for the three months ended March 31, 2024 and 2023, respectively.

Current wording

The Bancorp recognized losses of $30 million and $22 million for the three and six months ended June 30, 2024, respectively, in mortgage banking net revenue for valuation adjustments on the MSR portfolio, compared to gains of $13 million and losses of $40 million for the same periods in the prior year. The valuation adjustments on the MSR portfolio included increases of $10 million and $51 million for the three and six months ended June 30, 2024, respectively, and increases of $53 million and $34 million for the three and six months ended June 30, 2023, respectively, due to changes in market rates and other inputs in the valuation model, including future prepayment speeds and OAS

Previous wording

Further detail on the valuation of MSRs can be found in Note 12 of the Notes to Condensed 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 13 of the Notes to Condensed Consolidated Financial Statements for more information on the free-standing derivatives used to economically hedge the MSR portfolio.

Current wording

Further detail on the valuation of MSRs can be found in Note 12 of the Notes to Condensed 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 13 of the Notes to Condensed 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 for both the three and six months ended June 30, 2024 and 2023.

Previous wording

The Bancorp’s total residential mortgage loans serviced as of March 31, 2024 and 2023 were $115.7 billion and $120.4 billion, respectively, with $99.6 billion and $103.4 billion, respectively, of residential mortgage loans serviced for others.

Current wording

The Bancorp’s total residential mortgage loans serviced as of June 30, 2024 and 2023 were $113.7 billion and $119.7 billion, respectively, with $97.3 billion and $102.8 billion, respectively, of residential mortgage loans serviced for others.

Previous wording

Leasing business revenue decreased $18 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily driven by decreases in operating lease income and lease remarketing fees.

Current wording

Leasing business revenue decreased $9 million and $27 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily driven by decreases in operating lease income. The decrease for the six months ended June 30, 2024 also included a decrease in lease remarketing fees.

Previous wording

Other noninterest income increased $28 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to a decrease in the loss on the swap associated with the sale of Visa, Inc. Class B Shares.

Current wording

Other noninterest income decreased $37 million and $9 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to decreases in equity method investment income, partially offset by decreases in the loss on the swap associated with the sale of Visa, Inc. Class B Shares.

Previous wording

The Bancorp recognized negative valuation adjustments of $17 million related to the Visa total return swap during the three months ended March 31, 2024 compared to negative valuation adjustments of $31 million during the three months ended March 31, 2023. For additional information on the valuation of the swap associated with the sale of Visa, Inc. Class B Shares, refer to Note 21 of the Notes to Condensed Consolidated Financial Statements.

Current wording

Equity method investment income decreased $37 million and $36 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to a gain on the partial disposition of an equity method investment during the second quarter of 2023. The Bancorp recognized negative valuation adjustments of $23 million and $40 million related to the Visa total return swap during the three and six months ended June 30, 2024, respectively, compared to negative valuation adjustments of $30 million and $61 million during the three and six months ended June 30, 2023, respectively. For additional information on the valuation of the swap associated with the sale of Visa, Inc. Class B Shares, refer to Note 22 of the Notes to Condensed Consolidated Financial Statements.

Previous wording

Net securities gains were $10 million for the three months ended March 31, 2024 compared to $4 million for the three months ended March 31, 2023. For more information, refer to Note 4 of the Notes to Condensed Consolidated Financial Statements.

Current wording

Net securities gains were $3 million and $13 million for the three and six months ended June 30, 2024, respectively, compared to $7 million and $11 million for the three and six months ended June 30, 2023, respectively. For more information, refer to Note 4 of the Notes to Condensed Consolidated Financial Statements.

Previous wording

Net occupancy expense increased $6 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily driven by higher expenses associated with the maintenance and renovation of banking centers and expenses associated with the Bancorp’s continued expansion into Southeast markets.

Current wording

Net occupancy expense increased $6 million for the six months ended June 30, 2024 compared to the same period in the prior year primarily driven by expenses associated with the Bancorp’s continued expansion into Southeast markets and higher expenses associated with the maintenance and renovation of banking centers.

Previous wording

Leasing business expense decreased $9 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily driven by a decrease in depreciation expense associated with operating lease equipment.

Current wording

Leasing business expense decreased $9 million and $17 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily driven by decreases in depreciation expense associated with operating lease equipment.

Previous wording

FDIC insurance and other taxes increased $33 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to the incremental expense associated with the Bancorp’s updated estimate of its allocated share of the FDIC’s special assessment, as further discussed in the Overview section of MD&A.

Current wording

Other noninterest expense included the impacts of FDIC insurance and other taxes which increased $5 million and $37 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year primarily due to the incremental expenses associated with the Bancorp’s updated estimate of its allocated share of the FDIC’s special assessment, as further discussed in the Overview section of MD&A.

Previous wording

The effective tax rate decreased to 21.1% for the three months ended March 31, 2024 compared to 22.3% for the same period in the prior year primarily due to a decrease in state tax expense associated with the recognition of certain previously unrecognized tax benefits during the three months ended March 31, 2024.

Current wording

The effective tax rate decreased to 21.3% and 21.2% for the three months and six months ended June 30, 2024, respectively, compared to 22.5% and 22.4% for the three months and six months ended June 30, 2023, respectively, primarily related to the remeasurement of deferred tax assets for changes in certain state tax laws which were enacted during the three months ended June 30, 2024. The decrease for the six months ended June 30, 2024 was also affected by a decrease in state tax expense associated with the recognition of certain previously unrecognized tax benefits.

Previous wording

Total loans and leases, including loans and leases held for sale, decreased $788 million, or 1%, from December 31, 2023 primarily driven by a decrease in commercial loans and leases.

Current wording

Total loans and leases, including loans and leases held for sale, decreased $496 million from December 31, 2023 driven by a decrease in commercial loans and leases, partially offset by an increase in consumer loans.

Previous wording

Commercial loans and leases decreased $842 million, or 1%, from December 31, 2023 primarily due to a decrease in commercial and industrial loans, partially offset by increases in commercial construction loans and commercial mortgage loans. Commercial and industrial loans decreased $1.1 billion, or 2%, from December 31, 2023 primarily as a result of payoffs exceeding loan originations. Commercial construction loans increased $168 million, or 3%, from December 31, 2023 as draws on existing commitments and loan originations exceeded payoffs. Commercial mortgage loans increased $70 million, or 1%, from December 31, 2023 as loan originations exceeded payoffs.

Current wording

Commercial loans and leases decreased $982 million, or 1%, from December 31, 2023 due to a decrease in commercial and industrial loans, partially offset by increases in commercial construction loans, commercial mortgage loans and commercial leases. Commercial and industrial loans decreased $1.4 billion, or 3%, from December 31, 2023 primarily as a result of payoffs exceeding loan originations. Commercial construction loans increased $185 million, or 3%, from December 31, 2023 as draws on existing commitments and loan originations exceeded payoffs. Commercial mortgage loans increased $153 million, or 1%, from December 31, 2023 as loan originations exceeded payoffs. Commercial leases increased $129 million, or 5%, from December 31, 2023 primarily as a result of an increase in lease originations.