Total loans and leases, including held for sale, increased by $2.6 billion, or 2%, from December 31, 2024, to June 30, 2025. This growth was driven by increases in both consumer loans (up 4%) and commercial loans and leases (up 1%), with indirect secured consumer loans increasing by $1.3 billion or 8%.

Effective January 1, 2025, the Bancorp realigned its reporting structure, moving certain business banking customer relationships from Commercial Banking to Consumer and Small Business Banking. This aims to improve alignment of customer acquisition and servicing resources with customer product and service demand.

Core deposits decreased by $3.1 billion, or 2%, from December 31, 2024, primarily due to a decrease in transaction deposits. Average core deposits also decreased by 1% for the three months ended June 30, 2025, compared to the prior year, indicating ongoing funding challenges.

The efficiency ratio on an FTE basis improved to 56.2% for the three months ended June 30, 2025, down from 58.5% in the prior year. This indicates management's effectiveness in controlling noninterest expenses relative to revenue generation.

Management increased the Allowance for Credit Losses (ALLL) by $60 million from December 31, 2024, to $2.4 billion at June 30, 2025. This proactive stance is in response to deteriorating economic forecasts and an increase in specific reserves on individually evaluated commercial and industrial loans.

Noninterest expense increased by $43 million (4%) for the three months ended June 30, 2025, primarily driven by increases in compensation and benefits, technology and communications ($12 million increase), and marketing expense ($9 million increase) for customer acquisition activities.

Commercial nonaccrual loans and leases increased by $52 million to $508 million at June 30, 2025, from December 31, 2024. The overall nonperforming portfolio assets as a percent of portfolio loans and leases and OREO increased to 0.72% from 0.71%, indicating a slight deterioration in asset quality.

The Bancorp's NII sensitivity modeling projects a negative change in Net Interest Income (FTE) of (3.51)% and (4.48)% for 12 and 13-24 months, respectively, under a +200 bps ramp in interest rates. This indicates vulnerability to further interest rate increases.

The 'One Big Beautiful Bill Act' enacted on July 4, 2025, introduces significant changes to the U.S. tax code. The Bancorp is currently evaluating the impact of these changes on its effective tax rate, deferred tax assets and liabilities, and business activities, with effects to be reflected in Q3 2025 financial statements.

Average consumer loans increased by $3.1 billion, or 7%, for the three months ended June 30, 2025, compared to the prior year, primarily driven by indirect secured consumer loans, residential mortgage loans, and home equity. This growth outpaced the 4% increase in average commercial loans and leases, indicating a strong consumer market position.

Average core deposits decreased by $1.1 billion, or 1%, for the three months ended June 30, 2025, compared to the prior year. This decline was primarily due to decreases in average interest checking and savings deposits, partially offset by increases in money market and demand deposits, suggesting intense competition for deposits.

Fifth Third Bancorp operates as a diversified financial services company with three reportable segments: Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management. This diversification, along with its geographic footprint across eleven states, provides a stable foundation amidst market changes.

The efficiency ratio improved to 56.2% for the three months ended June 30, 2025, from 58.5% in the prior year. This improvement occurred even as total noninterest expense increased by $43 million (4%) year-over-year, indicating effective management of revenue growth relative to expense increases.

Compensation and benefits expense increased by $42 million and technology and communications expense increased by $12 million for the three months ended June 30, 2025, compared to the prior year. These are the primary drivers of the overall increase in noninterest expense.

Other noninterest expense decreased by $27 million for the three months ended June 30, 2025, primarily due to decreases in FDIC insurance and other taxes, losses and adjustments, and leasing business expense. This partially offset increases in other operational costs.

Technology and communications expense increased by $12 million, or 11%, for the three months ended June 30, 2025, compared to the prior year. This increase is primarily driven by increased investments in strategic initiatives and technology modernization efforts.

The Bancorp is evaluating the impact of ASU 2024-03, 'Expense Disaggregation Disclosures,' which introduces new requirements for disclosing employee compensation, depreciation, intangible asset amortization, and selling expenses. This standard is effective for the year ending December 31, 2027.

During the first quarter of 2025, the Bancorp settled an accelerated share repurchase transaction of $225 million. Additionally, the Board authorized management to purchase 100 million shares of common stock on June 13, 2025, superseding prior authorizations and indicating confidence in the company's valuation.

Cash dividends declared per common share increased by 6% year-over-year to $0.37 for the three months ended June 30, 2025, up from $0.35 in the prior year. This demonstrates a commitment to returning capital to shareholders.

As of June 30, 2025, the Bancorp maintained strong regulatory capital ratios, including a CET1 capital ratio of 10.58%, Tier 1 risk-based capital ratio of 11.85%, and Total risk-based capital ratio of 13.77%, all well above Basel III standardized minimums.

The Bancorp's CDC investments, which create affordable housing and revitalize business and residential areas, totaled $2.282 billion in assets at June 30, 2025, up from $2.179 billion at December 31, 2024. Unfunded commitments for these investments were $757 million.

The Bancorp utilizes tax credit programs such as the Low-Income Housing Tax Credit (LIHTC) and New Markets Tax Credit (NMTC) to support qualifying investments. These programs are accounted for under the proportional amortization method, reflecting ongoing social responsibility efforts.

The Bancorp operates under an Enterprise Risk Management Framework with a Three Lines of Defense structure, including Board oversight and a Capital Committee responsible for capital plan recommendations. This framework ensures strong governance and risk management practices.

The Baseline scenario for June 30, 2025, projects an average annual real GDP growth rate of 1.5% for 2025, followed by 1.4% in 2026, which is below trend. The average unemployment rate is expected to remain stable at 4.2% for 2025, indicating a cautious but not recessionary outlook in the near term.

The Baseline scenario assumes additional cuts to the federal funds rate, with an average of 4.2% in 2025 decreasing to 3.0% in 2027. Concurrently, credit spreads are projected to expand from an average of 2.0% in 2025 to a peak of 2.6% in late 2026, reflecting potential tightening in credit markets.

Management is closely monitoring various economic factors, including escalating global tensions and changes in U.S. trade policies (e.g., tariffs), which are identified as impacting commercial borrowers. These factors contribute to increased uncertainty in economic forecasts.