FIFTH THIRD BANCORP

5. Loans and Leases

The Bancorp diversifies its loan and lease portfolio by offering a variety of loan and lease products with various payment terms and rate structures. The Bancorp’s commercial loan and lease portfolio consists of lending to various industry types. Management periodically reviews the performance of its loan and lease products to evaluate whether they are performing within acceptable interest rate and credit risk levels and changes are made to underwriting policies and procedures as needed. The Bancorp maintains an allowance to absorb loan and lease losses that are expected to be incurred over the remaining contractual terms of the related loans and leases. For further information on credit quality and the ALLL, refer to Note 6.

The following table provides a summary of commercial loans and leases classified by primary purpose and consumer loans classified based upon product or collateral as of December 31:

Portfolio loans and leases are recorded net of unearned income, which totaled $380 million and $272 million as of December 31, 2024 and 2023, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $566 million and $593 million at December 31, 2024 and 2023, respectively, which is presented as a component of other assets in the Consolidated Balance Sheets. Additionally, portfolio loans and leases are recorded net of unamortized premiums and discounts, deferred direct loan origination fees and costs associated with loans and valuation adjustments associated with loans measured at fair value. These items totaled a net discount of $324 million and $395 million as of December 31, 2024 and 2023, respectively, of which $901 million and $865 million of net discount was related to solar energy installation loans, respectively.

The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $15.1 billion and $14.5 billion as of December 31, 2024 and 2023, respectively, pledged to the FHLB, and loans of $55.3 billion and $49.3 billion at December 31, 2024 and 2023, respectively, pledged to the FRB.

130 Fifth Third Bancorp

The following table presents a summary of the total loans and leases owned by the Bancorp and net charge-offs (recoveries) as of and for the years ended December 31:

(a)Excludes government guaranteed residential mortgage loans.

The following table presents the components of the net investment in portfolio leases as of December 31:

(a)Excludes $248 and $249 of leveraged leases at December 31, 2024 and 2023, respectively.

Interest income recognized in the Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 was $40 million, $26 million and $29 million, respectively, for direct financing leases and $82 million, $63 million and $50 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type portfolio leases for 2025 through 2029 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:

The lease residual value represents the present value of the estimated fair value of the leased equipment at the end of the lease. The Bancorp performs quarterly reviews of residual values associated with its leasing portfolio considering factors such as the subject equipment, structure of the transaction, industry, prior experience with the lessee and other factors that impact the residual value to assess for impairment. The Bancorp maintained an allowance of $16 million and $13 million at December 31, 2024 and 2023, respectively, to cover the losses that are expected to be incurred over the remaining contractual terms of the related leases, including the potential losses related to the lease residual value. Refer to Note 6 for additional information on credit quality and the ALLL.

131 Fifth Third Bancorp