FIFTH THIRD BANCORP
For the period ended Sep 30, 2025. Filed Nov 4, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 4, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Statements of Income Analysis
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 5 and 6 present the components of net interest income, net interest margin and net interest rate spread for the three and nine months ended September 30, 2025 and 2024, 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 $1.5 billion and $4.5 billion for the three and nine months ended September 30, 2025, respectively, increasing $98 million and $258 million compared to the same periods in the prior year. Net interest income for the three and nine months ended September 30, 2025 was positively impacted by lower short-term market rates and decreases in the average balances of interest-bearing liabilities, higher average balances of loans and leases and increases in yields on average consumer loans and leases. 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 2.41% and 2.38% for the three and nine months ended September 30, 2025, respectively, compared to 2.05% for both the three and nine months ended September 30, 2024. Changes in market rates resulted in a decrease on rates paid on average interest-bearing liabilities of 61 bps and 59 bps, partially offset by decreases in yields on average interest-earning assets of 25 bps and 26 bps for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year.
Net interest margin on an FTE basis (non-GAAP) was 3.13% and 3.10% for the three and nine months ended September 30, 2025, respectively, compared to 2.90% and 2.88% for the same periods in the prior year. Net interest margin for the three and nine months ended September 30, 2025 was positively impacted by the previously mentioned increases in net interest rate spread and decreases in average interest-earning assets, which included decreases in average other short-term investments partially offset by increases in average loans and leases.
Interest income on an FTE basis (non-GAAP) from loans and leases decreased $2 million and $39 million during the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily driven by decreases in yields on average commercial loans and leases associated with lower market rates, partially offset by increases 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 other short-term investments decreased $132 million and $406 million during the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 primarily due to decreases in the average balances of other short-term investments coupled with lower yields on those balances associated with lower market rates.
Interest expense on average core deposits decreased $197 million and $548 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily due to decreases in the cost of average interest-bearing core deposits to 238 bps for both the three and nine months ended September 30, 2025 from 297 bps and 295 bps for the three and nine months ended
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
September 30, 2024, respectively. 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 $52 million and $175 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 primarily due to decreases in the rates paid on average wholesale funding and decreases in the average balances of CDs over $250,000 and long-term debt, partially offset by increases in the average balances of FHLB advances. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s borrowings. During both the three and nine months ended September 30, 2025, average wholesale funding represented 15% of average interest-bearing liabilities compared to 16% for both the three and nine months ended September 30, 2024. For more information on the Bancorp’s interest rate risk management, including estimated earnings sensitivity to changes in market interest rates, refer to the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A.
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
| TABLE 5: Condensed Consolidated Average Balance Sheets and Analysis of Net Interest Income on an FTE Basis | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended · September 30, 2025 · September 30, 2024 · Attribution of Change in Net Interest Income(a) | |||||||||||
| ($ in millions) · Average Balance · Interest Earned/Paid · Average Yield/ Rate · Average Balance · Interest Earned/Paid · Average Yield/ Rate · Volume · Yield/ Rate · Total | |||||||||||
| Assets: | |||||||||||
| Interest-earning assets: | |||||||||||
| Loans and leases:(b) | |||||||||||
| Commercial and industrial loans | $54,196 | 847 | 6.20% | $51,630 | 929 | 7.15% | $44 | (126) | (82) | ||
| Commercial mortgage loans | 12,043 | 190 | 6.26 | 11,488 | 181 | 6.26 | 8 | 1 | 9 | ||
| Commercial construction loans | 5,541 | 100 | 7.17 | 5,982 | 107 | 7.14 | (8) | 1 | (7) | ||
| Commercial leases | 3,177 | 38 | 4.70 | 2,686 | 31 | 4.53 | 6 | 1 | 7 | ||
| Total commercial loans and leases | $74,957 | 1,175 | 6.22 | $71,786 | 1,248 | 6.91 | $50 | (123) | (73) | ||
| Residential mortgage loans | 18,279 | 186 | 4.03 | 17,604 | 164 | 3.71 | 7 | 15 | 22 | ||
| Home equity | 4,580 | 86 | 7.43 | 4,018 | 85 | 8.40 | 11 | (10) | 1 | ||
| Indirect secured consumer loans | 17,729 | 252 | 5.65 | 15,680 | 214 | 5.42 | 29 | 9 | 38 | ||
| Credit card | 1,678 | 60 | 14.26 | 1,708 | 60 | 14.00 | (1) | 1 | — | ||
| Solar energy installation loans | 4,355 | 96 | 8.76 | 3,990 | 81 | 8.12 | 8 | 7 | 15 | ||
| Other consumer loans | 2,415 | 57 | 9.25 | 2,629 | 62 | 9.37 | (4) | (1) | (5) | ||
| Total consumer loans | $49,036 | 737 | 5.96 | $45,629 | 666 | 5.81 | $50 | 21 | 71 | ||
| Total loans and leases | $123,993 | 1,912 | 6.12% | $117,415 | 1,914 | 6.48% | $100 | (102) | (2) | ||
| Securities: | |||||||||||
| Taxable | 53,244 | 435 | 3.25 | 55,329 | 452 | 3.25 | (18) | 1 | (17) | ||
| Exempt from income taxes(b) | 1,348 | 11 | 3.18 | 1,378 | 11 | 3.30 | — | — | — | ||
| Other short-term investments | 14,915 | 166 | 4.43 | 21,714 | 298 | 5.47 | (82) | (50) | (132) | ||
| Total interest-earning assets | $193,500 | 2,524 | 5.18% | $195,836 | 2,675 | 5.43% | $— | (151) | (151) | ||
| Cash and due from banks | 2,485 | 2,664 | |||||||||
| Other assets | 18,196 | 17,626 | |||||||||
| Allowance for loan and lease losses | (2,411) | (2,288) | |||||||||
| Total assets | $211,770 | $213,838 | |||||||||
| Liabilities and Equity: | |||||||||||
| Interest-bearing liabilities: | |||||||||||
| Interest checking deposits(d) | $56,624 | 388 | 2.72% | $58,605 | 498 | 3.38% | $(16) | (94) | (110) | ||
| Savings deposits | 16,376 | 19 | 0.46 | 17,272 | 31 | 0.71 | (2) | (10) | (12) | ||
| Money market deposits | 37,434 | 226 | 2.40 | 37,257 | 287 | 3.06 | 1 | (62) | (61) | ||
| CDs $250,000 or less | 10,841 | 94 | 3.46 | 10,543 | 108 | 4.07 | 3 | (17) | (14) | ||
| Total interest-bearing core deposits | $121,275 | 727 | 2.38 | $123,677 | 924 | 2.97 | $(14) | (183) | (197) | ||
| CDs over $250,000 | 2,244 | 23 | 4.00 | 3,499 | 44 | 5.08 | (13) | (8) | (21) | ||
| Federal funds purchased | 198 | 2 | 4.35 | 176 | 2 | 5.34 | — | — | — | ||
| Securities sold under repurchase agreements | 376 | 2 | 1.65 | 396 | 2 | 2.36 | — | — | — | ||
| FHLB advances | 4,920 | 56 | 4.51 | 2,576 | 36 | 5.59 | 28 | (8) | 20 | ||
| Derivative collateral and other borrowed money | 82 | 1 | 6.13 | 52 | 2 | 14.76 | 1 | (2) | (1) | ||
| Long-term debt | 14,001 | 188 | 5.31 | 16,716 | 238 | 5.65 | (37) | (13) | (50) | ||
| Total interest-bearing liabilities | $143,096 | 999 | 2.77% | $147,092 | 1,248 | 3.38% | $(35) | (214) | (249) | ||
| Demand deposits | 41,235 | 40,020 | |||||||||
| Other liabilities | 6,223 | 6,475 | |||||||||
| Total liabilities | $190,554 | $193,587 | |||||||||
| Total equity | $21,216 | $20,251 | |||||||||
| Total liabilities and equity | $211,770 | $213,838 | |||||||||
| Net interest income (FTE)(c) | $1,525 | $1,427 | $35 | 63 | 98 | ||||||
| Net interest margin (FTE)(c) | 3.13% | 2.90% | |||||||||
| Net interest rate spread (FTE)(c) | 2.41 | 2.05 | |||||||||
| Interest-bearing liabilities to interest-earning assets | 73.95 | 75.11 | |||||||||
(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.
(b)The FTE adjustments included in the above table were $5 and $6 for the three months ended September 30, 2025 and 2024, respectively.
(c)This is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
(d)Effective January 1, 2025, foreign office deposits are included in interest checking. Prior periods have been adjusted to conform to current period presentation.
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
| TABLE 6: Condensed Consolidated Average Balance Sheets and Analysis of Net Interest Income on an FTE Basis | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the nine months ended · September 30, 2025 · September 30, 2024 · Attribution of Change in Net Interest Income(a) | |||||||||||
| ($ in millions) · Average Balance · Interest Earned/Paid · Average Yield/ Rate · Average Balance · Interest Earned/Paid · Average Yield/ Rate · Volume · Yield/ Rate · Total | |||||||||||
| Assets: | |||||||||||
| Interest-earning assets: | |||||||||||
| Loans and leases:(b) | |||||||||||
| Commercial and industrial loans | $53,916 | 2,513 | 6.23% | $52,423 | 2,795 | 7.12% | $78 | (360) | (282) | ||
| Commercial mortgage loans | 12,282 | 562 | 6.12 | 11,394 | 535 | 6.27 | 41 | (14) | 27 | ||
| Commercial construction loans | 5,720 | 303 | 7.09 | 5,877 | 315 | 7.16 | (8) | (4) | (12) | ||
| Commercial leases | 3,136 | 112 | 4.77 | 2,602 | 85 | 4.37 | 19 | 8 | 27 | ||
| Total commercial loans and leases | $75,054 | 3,490 | 6.22 | $72,296 | 3,730 | 6.89 | $130 | (370) | (240) | ||
| Residential mortgage loans | 18,139 | 541 | 3.99 | 17,412 | 474 | 3.64 | 20 | 47 | 67 | ||
| Home equity | 4,396 | 245 | 7.47 | 3,960 | 248 | 8.35 | 25 | (28) | (3) | ||
| Indirect secured consumer loans | 17,156 | 721 | 5.62 | 15,410 | 598 | 5.18 | 71 | 52 | 123 | ||
| Credit card | 1,655 | 179 | 14.44 | 1,736 | 176 | 13.53 | (8) | 11 | 3 | ||
| Solar energy installation loans | 4,282 | 266 | 8.30 | 3,900 | 236 | 8.08 | 24 | 6 | 30 | ||
| Other consumer loans | 2,465 | 170 | 9.24 | 2,752 | 189 | 9.16 | (20) | 1 | (19) | ||
| Total consumer loans | $48,093 | 2,122 | 5.90 | $45,170 | 1,921 | 5.68 | $112 | 89 | 201 | ||
| Total loans and leases | $123,147 | 5,612 | 6.09% | $117,466 | 5,651 | 6.43% | $242 | (281) | (39) | ||
| Securities: | |||||||||||
| Taxable | 54,441 | 1,328 | 3.26 | 55,196 | 1,347 | 3.26 | (18) | (1) | (19) | ||
| Exempt from income taxes(b) | 1,362 | 33 | 3.18 | 1,395 | 34 | 3.28 | — | (1) | (1) | ||
| Other short-term investments | 14,050 | 477 | 4.54 | 21,174 | 883 | 5.57 | (262) | (144) | (406) | ||
| Total interest-earning assets | $193,000 | 7,450 | 5.16% | $195,231 | 7,915 | 5.42% | $(38) | (427) | (465) | ||
| Cash and due from banks | 2,437 | 2,681 | |||||||||
| Other assets | 17,911 | 17,571 | |||||||||
| Allowance for loan and lease losses | (2,383) | (2,309) | |||||||||
| Total assets | $210,965 | $213,174 | |||||||||
| Liabilities and Equity: | |||||||||||
| Interest-bearing liabilities: | |||||||||||
| Interest checking deposits(d) | $57,103 | 1,152 | 2.70% | $58,528 | 1,483 | 3.38% | $(36) | (295) | (331) | ||
| Savings deposits | 16,852 | 62 | 0.49 | 17,707 | 91 | 0.69 | (4) | (25) | (29) | ||
| Money market deposits | 36,731 | 662 | 2.41 | 35,791 | 802 | 2.99 | 21 | (161) | (140) | ||
| CDs $250,000 or less | 10,574 | 279 | 3.54 | 10,518 | 327 | 4.15 | 1 | (49) | (48) | ||
| Total interest-bearing core deposits | $121,260 | 2,155 | 2.38 | $122,544 | 2,703 | 2.95 | $(18) | (530) | (548) | ||
| CDs over $250,000 | 2,263 | 71 | 4.17 | 4,585 | 177 | 5.16 | (77) | (29) | (106) | ||
| Federal funds purchased | 199 | 7 | 4.37 | 202 | 8 | 5.39 | — | (1) | (1) | ||
| Securities sold under repurchase agreements | 339 | 3 | 1.27 | 378 | 6 | 2.06 | (1) | (2) | (3) | ||
| FHLB advances | 4,888 | 167 | 4.57 | 2,949 | 125 | 5.68 | 70 | (28) | 42 | ||
| Derivative collateral and other borrowed money | 85 | 4 | 6.06 | 55 | 4 | 9.50 | 2 | (2) | — | ||
| Long-term debt | 14,393 | 575 | 5.35 | 15,951 | 682 | 5.71 | (65) | (42) | (107) | ||
| Total interest-bearing liabilities | $143,427 | 2,982 | 2.78% | $146,664 | 3,705 | 3.37% | $(89) | (634) | (723) | ||
| Demand deposits | 40,641 | 40,374 | |||||||||
| Other liabilities | 6,264 | 6,904 | |||||||||
| Total liabilities | $190,332 | $193,942 | |||||||||
| Total equity | $20,633 | $19,232 | |||||||||
| Total liabilities and equity | $210,965 | $213,174 | |||||||||
| Net interest income (FTE)(c) | $4,468 | $4,210 | $51 | 207 | 258 | ||||||
| Net interest margin (FTE)(c) | 3.10% | 2.88% | |||||||||
| Net interest rate spread (FTE)(c) | 2.38 | 2.05 | |||||||||
| Interest-bearing liabilities to interest-earning assets | 74.31 | 75.12 | |||||||||
(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.
(b)The FTE adjustments included in the above table were $15 and $18 for the nine months ended September 30, 2025 and 2024, respectively.
(c)This is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.
(d)Effective January 1, 2025, foreign office deposits are included in interest checking. Prior periods have been adjusted to conform to current period presentation.
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
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 the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2024.
The provision for credit losses was $197 million and $544 million for the three and nine months ended September 30, 2025, respectively, compared to $160 million and $351 million during the same periods in the prior year. Provision expense for the three and nine months ended September 30, 2025 increased primarily driven by the impairment of an asset-backed finance commercial loan which included a charge-off of $178 million and a specific allowance of $20 million. The increase in provision expense for the three months ended September 30, 2025 was partially offset by factors that reduced the ACL from June 30, 2025, including improvement in the economic forecast used to calculate the ACL and impacts of changes in loan portfolio mix. The increase in provision expense for the nine months ended September 30, 2025 was partially offset by factors that reduced the ACL from December 31, 2024, including impacts of changes in loan portfolio mix, as the improvement in the economic forecast used in the third quarter was more than offset by deterioration in the forecast used in the first and second quarters of 2025.
The ALLL decreased $87 million from December 31, 2024 to $2.3 billion at September 30, 2025. At September 30, 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 $17 million from December 31, 2024 to $151 million at September 30, 2025. At September 30, 2025, the ACL as a percent of portfolio loans and leases decreased to 1.96%, compared to 2.08% at December 31, 2024.
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 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 $70 million and $107 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024.
The following table presents the components of noninterest income:
| TABLE 7: Components of Noninterest Income | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| For the three months endedSeptember 30, · For the nine months endedSeptember 30, | |||||||||
| ($ in millions) · 2025 · 2024 · % Change · 2025 · 2024 · % Change | |||||||||
| Wealth and asset management revenue | $181 | 163 | 11 | $519 | 483 | 7 | |||
| Commercial payments revenue | 157 | 154 | 2 | 462 | 453 | 2 | |||
| Consumer banking revenue | 144 | 143 | 1 | 428 | 418 | 2 | |||
| Capital markets fees | 115 | 111 | 4 | 294 | 301 | (2) | |||
| Commercial banking revenue | 87 | 93 | (6) | 247 | 267 | (7) | |||
| Mortgage banking net revenue | 58 | 50 | 16 | 171 | 154 | 11 | |||
| Other noninterest income (loss) | 29 | (13) | NM | 86 | 18 | 378 | |||
| Securities gains, net | 10 | 10 | — | 17 | 23 | (26) | |||
| Total noninterest income | $781 | 711 | 10 | $2,224 | 2,117 | 5 | |||
Wealth and asset management revenue increased $18 million and $36 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 primarily driven by increases in personal asset management revenue and brokerage income. The Bancorp’s trust and registered investment advisory businesses had approximately $681 billion and $635 billion in total assets under care as of September 30, 2025 and 2024, respectively, and managed $77 billion and $69 billion in assets for individuals, corporations and not-for-profit organizations as of September 30, 2025 and 2024, respectively.
Commercial payments revenue increased $9 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily driven by increases 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 partially offset by a decrease in credit card interchange due to decreased customer spend.
Consumer banking revenue increased $10 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily driven by an increase in deposit fees due to increased overdraft occurrences.
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Capital markets fees increased $4 million and decreased $7 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024. The increase for the three months ended September 30, 2025 was primarily driven by increases in loan syndication revenue and merger and acquisition fees, partially offset by a decrease in corporate bond fees. The decrease for the nine months ended September 30, 2025 was primarily driven by decreases in corporate bond fees, merger and acquisition fees and revenue from commercial customer foreign exchange derivatives, partially offset by an increase in loan syndication revenue.
Commercial banking revenue decreased $6 million and $20 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 primarily driven by decreases in operating lease income.
Mortgage banking net revenue increased $8 million and $17 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024.
The following table presents the components of mortgage banking net revenue:
| TABLE 8: Components of Mortgage Banking Net Revenue | ||||
|---|---|---|---|---|
| For the three months endedSeptember 30, | For the nine months endedSeptember 30, | |||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 |
| Origination fees and gains on loan sales | $22 | 18 | 56 | 50 |
| Net mortgage servicing revenue: | ||||
| Gross mortgage servicing fees | 73 | 77 | 219 | 233 |
| Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs | (37) | (45) | (104) | (129) |
| Net mortgage servicing revenue | 36 | 32 | 115 | 104 |
| Total mortgage banking net revenue | $58 | 50 | 171 | 154 |
Origination fees and gains on loan sales increased $4 million and $6 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 primarily driven by higher volumes of saleable rate lock mortgage loan originations. Residential mortgage loan originations were $1.9 billion for both the three months ended September 30, 2025 and 2024. Residential mortgage loan originations increased to $5.3 billion from $4.6 billion for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to an increase in the average loan size originated and an increase in correspondent channel volume.
The following table presents the components of net valuation adjustments on the MSR portfolio and the impact of the Bancorp’s hedging strategy:
| TABLE 9: Components of Net Valuation Adjustments on MSRs | ||||
|---|---|---|---|---|
| For the three months endedSeptember 30, | For the nine months endedSeptember 30, | |||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 |
| Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio | $3 | 45 | 35 | (17) |
| Changes in fair value: | ||||
| Due to changes in inputs or assumptions(a) | — | (49) | (24) | 1 |
| Other changes in fair value(b) | (40) | (41) | (115) | (113) |
| Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs | $(37) | (45) | (104) | (129) |
(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.
Net mortgage servicing revenue increased $4 million and $11 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year as decreases in negative valuation adjustments of $8 million and $25 million on the MSR and MSR related hedges for the three and nine months ended September 30, 2025, respectively, were partially offset by decreases in gross mortgage servicing fees of $4 million and $14 million for the three and nine months ended September 30, 2025, respectively. The valuation adjustments on the MSR portfolio included an increase of an immaterial amount and a decrease of $24 million for the three and nine months ended September 30, 2025, respectively, and a decrease of $49 million and an increase of $1 million for the three and nine months ended September 30, 2024, respectively, due to changes in market rates and other inputs in the valuation model, including future prepayment speeds and OAS assumptions. The fair value of the MSR portfolio decreased $40 million and $115 million for the three and nine months ended
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
September 30, 2025, respectively, and decreased $41 million and $113 million for the three and nine months ended September 30, 2024, respectively, as a result of contractual principal payments and actual prepayment activity.
Further detail on the valuation of MSRs can be found in Note 8 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 9 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 nine months ended September 30, 2025 and 2024.
The Bancorp’s total residential mortgage loans serviced as of September 30, 2025 and 2024 were $106.5 billion and $112.4 billion, respectively, with $89.6 billion and $95.8 billion, respectively, of residential mortgage loans serviced for others.
Other noninterest income increased $42 million and $68 million for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024 primarily due to decreases in the loss on the swap associated with the sale of Visa, Inc. Class B Shares and increases in equity method investment income.
Net securities gains were $10 million and $17 million for the three and nine months ended September 30, 2025, respectively, compared to $10 million and $23 million for the three and nine months ended September 30, 2024, respectively. For more information, refer to Note 4 of the Notes to Condensed Consolidated Financial Statements.
Noninterest Expense
Noninterest expense increased $23 million and $28 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year.
The following table presents the components of noninterest expense:
| TABLE 10: Components of Noninterest Expense | ||||||
|---|---|---|---|---|---|---|
| For the three months endedSeptember 30, | For the nine months endedSeptember 30, | |||||
| ($ in millions) | 2025 | 2024 | % Change | 2025 | 2024 | % Change |
| Compensation and benefits | $685 | 690 | (1) | $2,132 | 2,099 | 2 |
| Technology and communications | 128 | 121 | 6 | 378 | 351 | 8 |
| Net occupancy expense | 89 | 81 | 10 | 260 | 251 | 4 |
| Equipment expense | 44 | 38 | 16 | 126 | 114 | 11 |
| Loan and lease expense | 39 | 34 | 15 | 105 | 96 | 9 |
| Marketing expense | 34 | 26 | 31 | 105 | 92 | 14 |
| Card and processing expense | 22 | 22 | — | 65 | 63 | 3 |
| Other noninterest expense | 226 | 232 | (3) | 664 | 741 | (10) |
| Total noninterest expense | $1,267 | 1,244 | 2 | $3,835 | 3,807 | 1 |
| Efficiency ratio on an FTE basis(a) | 54.9% | 58.2 | 57.3 | 60.2 | ||
(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 $33 million for the nine months ended September 30, 2025 compared to the same period in the prior year primarily driven by increases in base compensation and performance-based compensation, partially offset by a decrease in employee benefits expense. Full-time equivalent employees totaled 18,476 at September 30, 2025 compared to 18,579 at September 30, 2024.
Technology and communications expense increased $7 million and $27 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily driven by increased investments in strategic initiatives and technology modernization.
Net occupancy expense increased $8 million and $9 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily driven by expenses associated with the Bancorp’s continued expansion into Southeast markets.
Marketing expense increased $8 million and $13 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily due to increased spend on customer acquisition activities.
Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
The following table presents the components of other noninterest expense:
| TABLE 11: Components of Other Noninterest Expense | ||||
|---|---|---|---|---|
| For the three months endedSeptember 30, | For the nine months endedSeptember 30, | |||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 |
| FDIC insurance and other taxes | $28 | 35 | 106 | 155 |
| Data processing | 21 | 21 | 61 | 61 |
| Leasing business expense | 18 | 21 | 54 | 69 |
| Losses and adjustments | 19 | 20 | 52 | 69 |
| Dues and subscriptions | 16 | 15 | 49 | 46 |
| Travel | 16 | 15 | 48 | 44 |
| Securities recordkeeping | 15 | 14 | 42 | 41 |
| Professional service fees | 13 | 12 | 38 | 35 |
| Postal and courier | 13 | 12 | 37 | 36 |
| Cash and coin processing | 11 | 12 | 34 | 36 |
| Intangible amortization | 7 | 8 | 22 | 27 |
| Other, net | 49 | 47 | 121 | 122 |
| Total other noninterest expense | $226 | 232 | 664 | 741 |
Other noninterest expense decreased $6 million and $77 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily driven by decreases in FDIC insurance and other taxes. The decrease for the nine months ended September 30, 2025 also included decreases in losses and adjustments and leasing business expense.
FDIC insurance and other taxes decreased $7 million and $49 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year primarily due to the impact of the Bancorp’s quarterly updated estimate of its allocated share of the FDIC’s special assessment.
Losses and adjustments decreased $17 million for the nine months ended September 30, 2025 compared to the same period in the prior year primarily due to elevated expense levels in the prior year related to remediation items. Leasing business expense decreased $15 million for the nine months ended September 30, 2025 compared to the same period in the prior year primarily driven by a decrease in depreciation expense associated with operating lease equipment.
Applicable Income Taxes
The Bancorp’s income before income taxes, applicable income tax expense and effective tax rate are as follows:
| TABLE 12: Applicable Income Taxes | ||||
|---|---|---|---|---|
| For the three months endedSeptember 30, | For the nine months endedSeptember 30, | |||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 |
| Income before income taxes | $837 | 728 | 2,298 | 2,151 |
| Applicable income tax expense | 188 | 155 | 507 | 457 |
| Effective tax rate | 22.6% | 21.3 | 22.1 | 21.3 |
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 rate increased to 22.6% for the three months ended September 30, 2025 compared to 21.3% for the same period in the prior year primarily related to decreases in tax credits and other tax benefits from CDC investments as well as other tax credits. The effective tax rate increased to 22.1% for the nine months ended September 30, 2025 compared to 21.3% for the same period in the prior year primarily related to an increase in state tax expense.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.