Fifth Third Bancorp (FITB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates stable to positive financial performance, with projected revenue growth and strategic expansion plans. The Q&A section highlights successful integration and synergy realization from the Comerica acquisition, with no material changes to initial assumptions. Despite some uncertainties in loan utilization, the overall sentiment from analysts is positive, especially with the accelerated integration timeline and anticipated cost savings. The company's focus on technology and expansion in high-growth areas further supports a positive outlook.
Key Financial Performance
Earnings Per Share (EPS) $1.04 or $1.08 (excluding certain items), reflecting strong performance.
Adjusted Return on Equity 14.5%, among the best of all banks regardless of size.
Adjusted Return on Assets 1.41%, among the best of all banks regardless of size.
Adjusted Efficiency Ratio 54.3%, a 50-basis point improvement from the fourth quarter of 2024.
Adjusted Fourth Quarter Revenues Increased 5% year-over-year, driven by 6% growth in net interest income, 8% growth in commercial payments fees, and 13% growth in wealth and asset management fees.
Average Loans Increased 5% year-over-year, driven by 7% growth in consumer loans and 7% growth in middle market and business banking C&I loans.
Average Core Deposits Grew 1% year-over-year, driven by 5% growth in consumer DDA and 3% growth in commercial DDA.
Net Charge-Offs 40 basis points for the quarter, the lowest level in the past 7 quarters.
Nonperforming Assets Decreased for the third consecutive quarter.
CET1 Ratio Increased to 10.8%, reflecting strong earnings performance.
Tangible Book Value Per Share Grew 21% year-over-year, thanks to strong earnings performance and the continued pull to par of the AFS portfolio.
Net Interest Income (NII) $1.5 billion for the quarter, a 6% increase over last year, driven by loan growth, proactive liability management, and repricing benefits on fixed rate assets.
Net Interest Margin (NIM) Expanded 16 basis points, finishing the year at 3.13%.
Commercial Loans Average loans grew 4%, excluding CRE categories, increased 5% year-over-year.
Consumer Loans Grew by 6% on an average basis compared to last year, with auto and home equity lending accelerating by 11% and 16%, respectively.
Interest-Bearing Deposit Costs 2.28% in the fourth quarter, down 40 basis points year-over-year.
Adjusted Noninterest Income Grew 3% sequentially and year-over-year, driven by 13% increase in wealth fees, 5% sequential increase in capital market fees, and 8% year-over-year increase in commercial payment fees.
Net Charge-Off Ratio 40 basis points for the quarter, an improvement of 6 basis points from the fourth quarter of last year.
Portfolio NPAs Down $4 million sequentially, with a 20% decrease since the first quarter of last year.
Consumer Charge-Offs 59 basis points, down 9 basis points from the prior year.
CET1 Capital Ratio Ended at 10.8%, up 20 basis points, reflecting strong capital generation.
Operating Highlights
Consumer mobile app: Recognized by J.D. Power as the top mobile banking app for user satisfaction among regional banks. Over 400 updates shipped, including features like direct deposit switching, financial wellness hub, and free estate planning capabilities.
Newline embedded payments platform: Revenues more than doubled compared to the fourth quarter of last year. Deposits increased by $1.4 billion. Launched a model context protocol server for secure API access, a first among U.S. banks.
Southeast branch expansion: Opened 50 new branches, including the 200th branch in Florida and 100th in the Carolinas. Southeast branches deliver deposit growth 45% higher than peer de novo branches.
Net new consumer households: Grew 2.5% year-over-year, with 7% growth in the Southeast, including 10% in Georgia and 9% in the Carolinas.
Comerica merger: Received regulatory and shareholder approvals. Expected to close on February 1, 2026. Plans to scale Comerica's middle market platform, deepen client relationships, and expand retail banking with 150 new Texas branches.
Operational efficiencies: Achieved $200 million in annualized run rate savings through technology deployment and lean manufacturing principles. Adjusted efficiency ratio improved to 54.3%.
Loan portfolio granularity: Focused on middle market and small business lending. Middle market loans grew 7% year-over-year, and small business lending expanded by $1 billion.
Comerica merger synergies: Targeting $850 million in expense synergies and over $0.5 billion in revenue synergies over the next 5 years. Focus areas include scaling middle market platform, deepening client relationships, and creating an Innovation Banking business.
Risk or Challenges
Regulatory Approvals and Integration: The merger with Comerica requires successful integration and regulatory compliance. Any missteps in these areas could lead to operational disruptions or financial penalties.
Expense Synergies: The company aims to achieve $850 million in expense synergies from the Comerica merger. Failure to realize these synergies could impact profitability and efficiency targets.
Economic Uncertainty: The macroeconomic environment, including potential rate cuts and economic slowdown, could affect net interest income and loan growth.
Credit Risk: Net charge-offs are expected to normalize, and the incorporation of Comerica's loan portfolio could increase credit risk.
Deposit Growth: The company is focused on accelerating retail deposit growth, particularly in legacy Comerica branches. Failure to achieve this could impact funding costs and liquidity.
Technology and Digital Transformation: Continued investments in technology and digital transformation are critical. Any delays or failures in these initiatives could hinder operational efficiency and customer satisfaction.
Market Competition: The company faces competitive pressures in areas like commercial payments, wealth management, and retail banking. Failure to maintain or grow market share could impact revenue.
Operational Execution: The success of the Comerica integration and other strategic initiatives depends on disciplined operational execution. Any lapses could lead to inefficiencies or missed targets.
Guidance & Outlook
Revenue Projections: Full year net interest income (NII) is expected to range between $8.6 billion and $8.8 billion, with adjusted noninterest income projected between $4 billion and $4.4 billion. Adjusted revenue and adjusted pre-provision net revenue (PPNR) are expected to increase by 40% to 45% over 2025.
Margin Projections: Net interest margin (NIM) is expected to increase by approximately 15 basis points upon the close of the Comerica transaction, driven by discount accretion, securities repositioning, cash flow hedge repositioning, and funding synergies.
Loan Growth: Full year average total loans are expected to be in the mid-$170 billion range, primarily driven by broad-based improvement in commercial and industrial (C&I) loans.
Expense Guidance: Full year noninterest expense is expected to range between $7 billion and $7.3 billion, excluding CDI amortization and $1.3 billion in estimated acquisition-related charges. 37.5% of the $850 million in annualized run rate expense synergies from the Comerica merger are expected to be realized in 2026.
Credit and Charge-offs: Net charge-offs are expected to range between 30 and 40 basis points in 2026, reflecting normalization of credit trends and the impact of Comerica's loan portfolio.
Capital and CET1 Ratio: CET1 capital post-close of the Comerica acquisition is expected to remain near the 10.5% target. Share repurchases are expected to resume in the second half of 2026, depending on balance sheet growth and merger-related charges.
Comerica Integration and Synergies: The Comerica merger is expected to close on February 1, 2026, with systems conversion anticipated by the end of the third quarter. The merger is projected to deliver $850 million in expense synergies and more than $0.5 billion in revenue synergies over the next five years.
Market and Business Segment Growth: Revenue growth is expected in commercial payments, capital markets, and wealth and asset management. Retail deposit growth is targeted in legacy Comerica branches to improve the combined company's funding profile.
Shareholder Return Plan
Dividend Payments: The company emphasized its commitment to paying a strong and stable dividend as part of its capital return priorities.
Share Repurchase Program: The company paused share repurchases until the Comerica transaction closes. It expects to resume regular quarterly share repurchases in the second half of 2026, with the amount and timing dependent on balance sheet growth, final purchase accounting marks, and the timing of merger-related charges.
Key Q&A
Earnings Word Cloud
FITB Transcript
The earnings call summary indicates stable to positive financial performance, with projected revenue growth and strategic expansion plans. The Q&A section highlights successful integration and synergy realization from the Comerica acquisition, with no material changes to initial assumptions. Despite some uncertainties in loan utilization, the overall sentiment from analysts is positive, especially with the accelerated integration timeline and anticipated cost savings. The company's focus on technology and expansion in high-growth areas further supports a positive outlook.
The earnings call summary and Q&A indicate a positive outlook, with record net interest income expected and strong business segment performance. Despite some vague responses, management expressed confidence in growth areas like tech and life sciences, and plans for expansion and integration seem well-structured. The company's strategy to balance expenses and leverage the Comerica integration is promising. While there are some uncertainties, the overall sentiment leans towards positive expectations for the stock price in the short term.
FITB Slides
FITB Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
