Fifth Third Bancorp Q1 Earnings Call Highlights

Key Points

• Comerica acquisition closed Feb. 1 — the deal drove revenue up 33% YoY to $2.9 billion and adjusted net income +38% to $734 million, with NII at $1.94 billion and NIM expanding 17 bps to 3.30%, while tangible book value per share rose 1% sequentially.
• Integration and cost synergies on track — Fifth Third expects $360 million of net cost savings in 2026 and an $850 million annual run rate by Q4, with system conversion planned over Labor Day weekend and regular share repurchases set to resume in H2 2026.
• Credit and capital remain stable with updated guidance — net charge-offs fell to 37 bps and NPAs improved, CET1 ended the quarter at 10% (operating target 10–10.5%), and the bank raised full‑year NII guidance to $8.7–8.8 billion with loans expected in the mid‑$170 billion range.

Fifth Third Bancorp NASDAQ: FITB executives told investors the bank’s first-quarter 2026 results were shaped by the February 1 closing of its acquisition of Comerica, with management emphasizing early integration progress, improving capital metrics, and stable credit trends amid what CEO Tim Spence described as an uncertain macro backdrop.

Quarterly performance reflects acquisition close

Spence said the company reported earnings per share of $0.15, or $0.83 excluding certain items listed in the earnings release. Revenue totaled $2.9 billion, up 33% year-over-year, while adjusted net income rose 38% to $734 million. Credit performance was “in line with expectations,” with net charge-offs of 37 basis points; Spence noted that non-performing assets (NPAs) and criticized assets “improved modestly.”

Spence highlighted adjusted profitability and capital measures following the deal close, citing an adjusted return on assets of 1.12% and an adjusted return on tangible common equity (ROTCE) of 13.7%. He said the tangible common equity (TCE) ratio increased to 7.3% and tangible book value per share rose 1% during the quarter.

CFO Bryan Preston said results exceeded the bank’s March expectations, “driven by stronger NII, disciplined expense management, and integration execution on plan.” He added that the Comerica acquisition closed “without tangible book value dilution,” with tangible book value per share up 1% sequentially and 15% year-over-year.

Net interest income, margin expansion, and balance sheet trends

Preston said net interest income (NII) was $1.94 billion, above prior expectations, while net interest margin expanded 17 basis points to 3.30%, “driven by the impacts of the Comerica acquisition.” He broke out several acquisition-related contributors to the margin, including seven basis points from securities portfolio marks and repositioning, six basis points from cash flow hedge termination, and two basis points from purchase accounting accretion on the loan portfolio. Preston said a full quarter of these impacts would add “a few additional basis points” to NIM in the second quarter.

Loans ended the period at $178 billion, up 2% sequentially from pro forma combined year-end balances, with Preston describing growth as “broad-based,” including middle market production, higher line utilization, and momentum in home equity, auto, and the bank’s Provide fintech platform. Commercial line utilization ended the quarter at 40.7%, up about 120 basis points from pro forma combined year-end levels, and Preston said it “held steady throughout the volatility in March.”

Preston also discussed mix changes in the combined loan portfolio, noting that shared national credits represented 26% of total loans after adding Comerica, which he described as a “deliberate and ongoing reduction in concentration risk.”

Deposit mix, liquidity, and fee businesses

On funding, Preston reported average core deposits of $207 billion and end-of-period core deposits of $231 billion. Non-interest-bearing balances were 28% of core deposits at quarter-end, up from 25% a year earlier, which he attributed to Comerica’s commercial DDA franchise and Fifth Third’s consumer DDA growth. Total deposit costs were 158 basis points for the quarter, with interest-bearing deposit costs of 215 basis points, down 27 basis points year-over-year.

Preston said the company maintained “full Category 1 LCR compliance at 109%” and a loan-to-core deposit ratio of 76%, while average wholesale funding declined 3% year-over-year even with Comerica included.

Adjusted non-interest income was $921 million, slightly above the midpoint of March expectations, according to Preston. He highlighted that both wealth and commercial payments are now producing fee income at a run rate that would support $1 billion each in annualized non-interest income.

• Wealth: Preston said wealth fees were $233 million and assets under management ended the quarter at $119 billion. Legacy Fifth Third AUM was up $10 billion, or 15%, year-over-year, and Fifth Third Securities posted retail brokerage revenue growth of 15%.
• Commercial payments: Fees were $218 million. Direct Express contributed $14 million of fees and about $3.7 billion in average deposits during March. Newline revenue rose 30% year-over-year and related deposits reached $5.5 billion, up $2.7 billion from last year.
• Capital markets: Fees were $134 million, up 11% sequentially, driven by increased commodities and FX hedging and strong bond underwriting, along with two months of Comerica activity.

Integration milestones and synergy targets

Spence said timely regulatory approvals allowed the Comerica transaction to close earlier than expected on February 1, and that the integration is proceeding “on plan and on schedule.” He said the bank remains on track to convert systems over Labor Day weekend, with the first full mock conversion scheduled for later in April. Spence reiterated the company’s cost synergy targets, stating Fifth Third expects to deliver $360 million of net cost savings in 2026 and reach an $850 million annual run rate by the fourth quarter.

Preston said adjusted non-interest expense was $1.77 billion, consistent with guidance, and cited $635 million in merger-related expenses as a key item impacting reported costs. The adjusted efficiency ratio was 61.9%, which Preston attributed to the addition of Comerica and “normal first quarter seasonality.” He said expense savings should “build steadily over the first three quarters,” with a more significant increase in the fourth quarter after system conversion and branch consolidations are completed in early September.

During Q&A, Spence told Wells Fargo analyst Mike Mayo that integration work has not produced “big surprises,” adding that “the absence of any surprises is a positive.” Spence said employee attrition was “running a little bit below historical levels,” and highlighted consumer marketing tests in Texas that he described as performing well. He said a test mailing to 700,000 households generated good response rates, and that a subsequent campaign mailed to 6 million people was showing “super positive” early results. Spence said the bank expects that campaign to generate $1 billion in deposits across Texas, Arizona, and California, adding that it is already incorporated into guidance.

Credit, capital, and updated outlook

Preston said net charge-offs were 37 basis points, the lowest level in two years, and the NPA ratio improved to 57 basis points from 65 basis points in the prior quarter. Commercial net charge-offs were 26 basis points, also a two-year low, while consumer net charge-offs were 58 basis points, down five basis points from the prior year.

He provided detail on exposure areas, including that non-depository financial institutions comprised 7% of total loans, and that Fifth Third has “chosen not to participate meaningfully” in lending to private credit vehicles and BDCs, which he said represent less than 1% of total loans. Spence later added in Q&A that the bank avoided private credit-related lending due to difficulty assessing total leverage in structures and because it does not view the area as one where “banks are going to build competitive barriers.”

Allowance for credit losses as a percentage of portfolio loans and leases decreased to 1.79%, “primarily reflecting the Comerica acquisition,” while ACL as a percentage of NPAs increased to 316%. Preston said provision expense included $83 million for merger-related day-one ACL build, and that the company applied a qualitative adjustment tied to elevated energy and commodity costs and broader geopolitical implications.

On capital, Preston said CET1 ended the quarter at 10%, reflecting the Comerica transaction and risk-weighted asset growth. Under the proposed capital rule, Fifth Third’s estimated fully phased-in pro forma CET1 ratio would be 9.6%, which Preston said reflects nearly a 100 basis point improvement from RWA changes “primarily due to credit risk RWA reduction.” The bank updated its CET1 operating target range to 10% to 10.5%.

For guidance, Preston said the bank’s full-year 2026 NII outlook was updated to $8.7 billion to $8.8 billion, reflecting the end-of-March forward curve that assumes no rate cuts or hikes in 2026. Full-year average loans are expected in the mid-$170 billion range, with non-interest income projected at $4.0 billion to $4.2 billion and non-interest expense expected at $7.2 billion to $7.3 billion, including $210 million of CDI amortization and $360 million of net expense synergies, excluding acquisition-related charges. The bank expects full-year net charge-offs of 30 to 40 basis points.

For the second quarter, Preston guided to average loans of $178 billion to $179 billion, NII of $2.2 billion to $2.25 billion, and NIM expansion of 3 to 5 basis points. He projected non-interest income of $1.0 billion to $1.06 billion and non-interest expense of $1.87 billion to $1.89 billion, with net charge-offs expected between 30 and 35 basis points.

Preston also said the company expects to resume “regular quarterly share repurchases in the second half of 2026,” depending on balance sheet growth and remaining merger-related charges, while reiterating capital priorities of maintaining a strong dividend, supporting organic growth, and then repurchasing shares.

About Fifth Third Bancorp NASDAQ: FITB

Fifth Third Bancorp is a Cincinnati, Ohio–based bank holding company whose primary banking subsidiary operates as Fifth Third Bank. The company provides a broad range of financial services to individual consumers, small businesses, middle-market companies and large corporations. Its business mix includes retail and commercial banking, lending, payment and card services, treasury and cash management, and wealth management and investment advisory services delivered through a combination of branch locations, commercial offices and digital platforms.

On the consumer side, Fifth Third offers deposit accounts, consumer loans, mortgages, auto financing and credit card products, along with digital banking and mobile services.

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