Fifth Third Bancorp

by obsessing over the details in our day-to-day operations while consistently investing for the long term. This disciplined approach has delivered shareholder returns that rank among the best in our peer group over the last three, five, seven, and 10-year timeframes. Today, we reported earnings per share of $1.04, or $1.08, excluding certain items outlined on page two of the release. We achieved an adjusted return on equity of 14.5%, an adjusted return on assets of 1.41%, and an adjusted efficiency ratio of 54.3%, all among the best of all banks, regardless of size, who have reported thus far. Adjusted fourth quarter revenues rose 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. Fourth quarter 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 were 40 basis points for the quarter, the lowest level in the past seven quarters, and non-performing assets decreased for the third consecutive quarter. Our CET1 ratio increased to 10.8% and tangible book value per share grew 21% year-over-year, thanks to strong earnings performance and the continued pull-to-par of our AFF portfolio. The fourth quarter capped a year of milestones for Fifth Third. In the Southeast, we opened 50 new branches, including our 200th branch in Florida and our 100th branch in the Carolinas. To put this in context, if Fifth Third Florida were a standalone bank, it would have the 44th largest branch network in the U.S., and Fifth Third Carolinas would have the 78th largest. Our de novo branches continue to deliver deposit growth that is 45% higher than peer de novo branches. Net new consumer households grew 2.5% year over year, with the southeast growing households by 7%, highlighted by 10% growth in Georgia and 9% in the Carolinas. Our sustained investments in digital transformation continue to set Fifth Third apart as well. In 2025, our consumer mobile app was recognized by J.D. Power as the top mobile banking app for user satisfaction among regional banks. We shipped over 400 updates to the app during the year, including features such as direct deposit switching, a financial wellness hub with cash flow insights and spending analysis, and free estate planning capabilities through our partnership with FinTech, Trust, and Will. In small business, a little over a year ago, we asked our FinTech, Provide, to lead all of small business for Fifth Third. Since then, Fifth Third has become a top 20 national FBA lender for the first time anyone can remember and finished number two in J.D. Power's 2025 National Small Business Banking Satisfaction Study ahead of all other regional banks. In commercial payments, our software-enabled managed services, Big Data Healthcare, Expert AR and AP, And DTS Connects and our embedded payments platform, New Line, continued to grow rapidly. One in every three commercial clients we added in 2025 was a payments-only client with no credit extension. New Line revenues more than doubled compared to the fourth quarter of last year, and deposits increased by $1.4 billion. New Line's product team also finished the year strong. launching a model context protocol server to enable secure, standardized access to our API and documentation to AI agents. This is a key building block to support future agentic commerce applications and a first among U.S. banks. In commercial, we delivered new quality relationships, granular loan growth, and recurring fee revenue in the middle market as we continued to add RM talent in strategic growth markets and to benefit from hiring in prior years. New client acquisition increased 40% across all regions compared to 2024. Our emphasis on the Southeast Texas and California markets led to a 12% increase in RMs, producing 14% growth in CNI loans. In wealth and asset management, fourth quarter wealth fees increased 13%, and asset center management reached $80 billion for the quarter. The strong performance was broad-based. Fifth Third Wealth Advisors' AUM and fees increased 50% from a year ago. Fifth Third Securities generated record fees, and our private bank had its second highest level of gross AUM flows in recorded history. We continue to deploy technology and apply lean manufacturing principles to drive savings and enhance scalability. In 2025, our value streams approach $200 million in annualized run rate savings. Cross-functional teams continue to be focused on reducing waste and improving quality, which strengthens our execution and provides funding for continued investment in our growth strategies. We are excited about our momentum as we enter 2026, or as our partners at Kennesaw State like to say, there's a lot of action at the fraction. As we announced last week, we have received all material regulatory and shareholder approvals to complete our merger with Comerica. 99.7% of fifth-third votes and 97% of Comerica votes cast were in favor of the merger, an overwhelmingly positive result and a recognition of the value this combination will create. We expect to close on February 1st. 2026 will be a busy year as we focus on successful conversion and delivering $850 million in expense synergies. Looking ahead, I'm even more confident in our ability to realize the benefits of the combination, which will support continued peer-leading returns and efficiency in 2027 and beyond. I'm also excited to get to work delivering more than half a billion dollars in revenue synergies over the next five years across four areas of focus. First, scaling Comerica's middle market platform and vertical expertise. Second, deepening Comerica's commercial and wealth management client relationships to reach fifth-third levels of client wallet share. Third, building out Comerica's retail banking business with the Fifth Third Playbook and 150 Texas de novo branches. And fourth, creating a differentiated innovation banking business by combining Comerica's tech and life sciences vertical and Fifth Third's new line platform. Before I turn it over to Brian, I want to say thank you to our team, both at Fifth Third and our new Comerica colleagues. for the way you support our customers and our communities, and for your commitment to getting 1% better every day. I'm grateful to everyone who will work so hard in the coming months to ensure that 2026 is a success for the bank and its clients. I also want to say thank you to those individuals from both companies whose hard work brought us to this point, but who will not be continuing with us on this journey. All of you combined are what has made our company the special place that it is. With that, I'll turn it over to Brian, who will provide more detail on the quarter and on our outlook for 2026.

Thanks, Tim, and good morning. Our results show what disciplined execution delivers in an uncertain environment. Record four-year NII of $6 billion and $9 billion in total revenue, improving asset quality, and top quartile returns and efficiency. With a resilient balance sheet and an operating model built to deliver repeatable organic growth and scale benefits, We are positioned to generate growth and shareholder value as we integrate Comerica. Diving into our fourth quarter performance, we achieved an adjusted return on assets of 1.41%, our highest level since 2022, and a return on average tangible common equity, excluding AOCI, of 16.2%. Discipline expense management resulted in an adjusted efficiency ratio of 54.3%, a 50 basis point improvement from the fourth quarter of 2024. Adjusted PPNR for the quarter was over $1 billion, a 6% increase from the prior year. Our strong profitability enabled us to return $1.6 billion of capital to our shareholders in 2025, while also growing our tangible book value per share, including the impact of AOCI, 21% compared to the previous year. Looking at the balance sheet and NII, net interest income was $1.5 billion for the quarter, a 6% increase over last year. as net interest margin expanded 16 basis points, finishing the year at 3.13%. Loan growth, proactive liability management, and repricing benefits on fixed-rate assets contributed to the strong NIA performance throughout the year. Average loans grew 5% year-over-year. In commercial, average loans grew 4%, and excluding CRE categories, increased 5% year-over-year. Improving the granularity of our loan portfolio remains a priority. In middle market, We continue to add relationship managers in high-growth markets, which contributed to the 7% year-over-year increase in average middle market loans. In small business, we have extended the technology of Provide to all of small business lending. This expansion, combined with its core practice finance activities, drove a $1 billion increase in balances over last year. While on a sequential basis, commercial average balances were flat due to a decrease in utilization, Commercial production accelerated during the fourth quarter, rising 20% sequentially to a multi-year high. Indiana and the Carolinas led regional growth, and in our verticals, production was strongest in technology, healthcare, and metals, material, and construction. The utilization decrease coincided with the government shutdown during October and November, but stabilized in December at 35%, down from 36.7% in the third quarter. Corporate banking and CRE were the primary drivers of this decrease in utilization. Industry loan growth continues to be concentrated in lending to non-depository financial institutions, which represented approximately 60% of total industry loan growth and virtually all non-real estate and non-consumer related loan growth in the second half of 2025. We continue to prioritize granular, relationship-based middle market and small business lending. Shifting to consumer, loans grew by six percent on an average basis compared to last year auto and home equity lending accelerated in 2025 growing 11 and 16 respectively in the fourth quarter we achieved the number two origination market share in HELOC within our footprint up from number four in the prior year driven by improved branch performance and digital engagement we expect home equity production to remain robust due to the strength of home prices lower front-end interest rates, and low housing turnover. Turning to deposits, average core deposits increased 1% over last year, driven by 4% DDA growth, partially offset by slower growth in interest-bearing products as we managed funding costs in 2025. Interest-bearing deposit costs were 2.28% in the fourth quarter, down 40 basis points year-over-year, representing a 50% beta during 2025. As I mentioned on last quarter's call, we are focused on strong deposit growth as we prepare for the close of the Comerica merger. This resulted in a 3% sequential increase in average transaction deposits due to our growth bias and normal seasonality. As Tim highlighted, consumer household growth remained robust at 2.5% and continues to translate into strong consumer DDA performance, which increased 5% in 2025. Our proactive balance sheet management has enabled us to maintain a strong liquidity position and reduce overall funding costs as we prepare to integrate Comerica's balance sheet, which has a lower concentration of retail deposits. Growth in granular insured deposits provided flexibility to reduce wholesale funding, which declined 14% sequentially. This favorable mix shift lowered the cost of interest-bearing liabilities by 17 basis points. Our Southeast Inovo investments continue to deliver high-quality, low-cost retail deposits. Southeast consumer deposits increased by 4% sequentially, accounting for over 50% of the total consumer deposit growth for the quarter. Overall, our total cost of deposits in the Southeast is below 2% and generates a spread of more than 175 basis points relative to the Fed funds rate. We opened 50 Southeast branches in 2025. including 27 branches in the fourth quarter additionally we have now secured all locations for our southeast de novo program we also have 43 locations in texas with letters of intent either complete or in process as we begin to transition our de novo program to these new high growth markets we ended the quarter with full category 1 lcr compliance at 123 percent and their loan-to-core deposit ratio was 72%, down 3% from the prior quarter. Now on to fees. Adjusted non-interest income, excluding security gains and the other items listed on page 4 of our release, grew 3% sequentially and year-over-year. Wealth fees increased by 13% over last year, driven by $11 billion in AUM growth and strong retail brokerage activity. Capital market fees increased 5% sequentially, reflecting seasonal strength in M&A advisory. Commercial payment fees increased 8% year-over-year and 6% sequentially. This fee performance was driven by core treasury management activity and new line-related fees. New line-related deposits reached $4.3 billion, up $1.4 billion from a year ago. The securities losses of $5 million were from the mark-to-market impact of our non-qualified deferred compensation plan, which is offset in compensation expense. Moving to expenses, page 5 of our release details certain items that had a larger impact on our non-interest expenses this quarter, including a $50 million contribution to the Fifth Third Foundation, $13 million in merger-related expenses, and a $25 million benefit from the adjustment to the FDIC special assessment during the fourth quarter. The larger contribution to the foundation this year relates to increased community investments we will make as part of the Comerica merger and tax planning in response to tax law changes impacting 2026. Adjusting for these items, non-interest expense increased 4% compared to the year-ago quarter and 2% sequentially, reflecting ongoing strategic investments in technology, branches, marketing, and sales personnel. Savings from our value stream programs through automation and process redesign continue to help fund these investments. As Tim mentioned, our value streams reached $200 million in annualized run rate savings. Our normal course daily focus on these operating disciplines has resulted in a 54.3% adjusted efficiency ratio in the fourth quarter, and a 55.9% efficiency ratio for the full year, while still investing for growth and maintaining strong regulatory standing. Shifting to credit, the net charge-off ratio was 40 basis points for the quarter, in line with our expectations and an improvement of six basis points from the fourth quarter of last year. Portfolio NPAs were down $4 million sequentially, and the NPA ratio remained at 65 basis points. Since the first quarter of last year, Portfolio MPAs are down 20%, and commercial MPLs are down 30%, consistent with our expectations from early 2025. Commercial charge-offs were 27 basis points, down 5 basis points from the prior year. Overall, we are seeing stable trends across industries and geographies in our commercial portfolio. Consumer charge-offs were 59 basis points, down 9 basis points from the prior year, with improvements across nearly all asset classes. The overall consumer portfolio remains healthy, with non-accrual and over 90 delinquency rates stable to improving across all loan categories. ACL as a percentage of portfolio loans and leases remained at 1.96%, and the ACL as a percentage of non-performing assets was also stable at 302%. Provision expense included a $6 million reduction in our allowance for credit losses primarily reflecting the small decrease in end-of-period loan balances. Our baseline and downside cases assume unemployment reaching 4.7 and 8.4% in 2026. We made no changes to our scenario weightings during the quarter. Moving to capital, CET1 ended at 10.8% of 20 basis points, reflecting the strength of our capital generation and our decision to pause share repurchases until the Comerica transaction closes. The pro forma CET1 ratio, including the AOCI impact of the securities portfolio, stands at 9.1%. Since the first quarter, our unrealized loss on the ASS portfolio has decreased by 20%, despite only a four basis point decrease in the 10-year treasury rate. This outcome is the result of our strategy to invest in bullet or locked-out structures, which represent 60% of the fixed-rate securities in our AFS portfolio. We expect continued improvement in the unrealized losses given the high degree of certainty to our principal cash flow expectations as a result of our investment portfolio strategy. While 2025 was a more eventful year from a macroeconomic and policy uncertainty perspective than we expected, We are pleased with our disciplined operating performance and our ability to deliver on our financial commitments. Our full-year net interest income of $6 billion is 2.5% above our prior record, and our full-year operating leverage of 230 basis points is above the range we projected entering the year. We opened 2026 with strong business momentum and a clear focus on the critical actions necessary to deliver a successful integration of Comerica. Now moving to our current outlook, as we announced last week, we expect to close the Comerica transaction on February 1st, with systems conversion anticipated around the end of the third quarter. Additionally, our outlook uses the forward curve at the start of January, which assumed 25 basis point rate cuts in March and July. We expect full year NII to range between $8.6 and $8.8 billion. As part of the integration, We expect to take actions to better position the combined balance sheet within our rate risk appetite, including investment portfolio and hedge repositioning. We do not expect material one-time charges related to these actions. Based on the current rate outlook and our planned balance sheet actions, we expect MIM to increase approximately 15 basis points upon the close of the transaction. That increase is driven by four to five basis points of pickup from discount accretion on marked investment securities we will retain, another four to five basis points from repositioning the remaining securities with new positions, and three to four basis points from cash flow hedge repositioning. The remaining two to three basis points of improvement is driven by a combination of funding synergies and balance sheet mix. We also aim to accelerate retail deposit growth. with targeted analytical marketing in the legacy Comerica branches to improve the combined company's funding profile. We expect full-year average total loans to be in the mid $170 billion range. This increase is primarily driven by broad-based improvement at CNI. Our outlook assumes that commercial revolver utilization remains relatively stable throughout 2026. Full year adjusted non-interest income is expected to be between $4 and $4.4 billion, reflecting continued revenue growth in commercial payments, capital markets, and wealth and asset management. We expect full year non-interest expense to be between $7 and $7.3 billion, excluding the impact of anticipated CDI amortization and the $1.3 billion in estimated acquisition-related charges. This guidance assumes the realization of 37.5% of the $850 million of annualized run rate expense synergies in 2026. In total, our guide implies full year adjusted revenue and adjusted PPNR excluding CDI amortization to be up 40 to 45% over 2025 and another 1 to 200 basis points of positive operating leverage. We expect to exit 2026 at or near the profitability and efficiency levels consistent with the 2027 targets we announced with the acquisition. Moving to credit, we expect 2026 net charge-offs to range between 30 and 40 basis points, reflecting ongoing normalization of credit trends and the impact of the incorporation of Comerica's loan portfolio. Finally, turning to capital, We currently expect CET1 capital post-close of the Comerica acquisition to remain near our 10.5% target, subject to final purchase accounting marks and the timing of one-time merger-related charges. We continue to believe 10.5% is an appropriate target for our CET1 ratio for the combined company. Our capital return priorities remain paying a strong, stable dividend, organic growth, and then share repurchases. We expect 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. Given the magnitude of the impact of the merger on the first quarter, we are not providing first quarter guidance at this time. We will provide our customary outlook on our first quarter results in early March. In summary, We are excited about the opportunities to drive growth and profitability in 2026 as we continue our strategic investments and successfully integrate Comerica. These actions position us to deliver best-in-class performance in 2027 and beyond, creating lasting value for our shareholders and our clients. With that, let me turn it over to Matt to open up the call for Q&A. Thanks, Brian. Before we start Q&A, given the time we have this morning, we ask that you limit yourself to one question and one follow-up, and then return to the queue if you have additional questions. Operator, please open the call for Q&A.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad. As a reminder, we ask that you please limit yourself to one question and one follow-up. Your first question today comes from the line of Ibrahim Poonawalla from Bank of America. Your line is open.