Fifth Third Bancorp FITB reported second-quarter 2026 adjusted earnings per share (EPS) of $1.02, which surpassed the Zacks Consensus Estimate of 98 cents. In the prior-year quarter, the company posted EPS of 88 cents.
Results benefited from solid growth in net interest income (NII) and fee income, along with higher loan and deposit balances. Lower provisions for credit losses also offered support. However, a substantial rise in non-interest expenses acted as a headwind. Given the concern, FITB shares declined nearly 3.1% in the early trading session. A full day’s trading session will depict a clearer picture.
Results excluded a negative 19-cent impact of certain items, including merger-related charges, securities repositioning losses, technology-related asset impairments, severance expenses and interchange litigation matters. After considering these, the company reported net income available to common shareholders (GAAP basis) of $763 million, up 29% year over year.
FITB’s Quarterly Revenues & Expenses Rise
Total quarterly revenues (FTE) in the reported quarter were $3.28 billion, which increased 46% year over year. The top line surpassed the Zacks Consensus Estimate of $3.25 billion.
Fifth Third’s NII (on an FTE basis) for the second quarter was $2.22 billion, up 48% year over year. This improvement primarily reflected the full-quarter contribution from Comerica. Organic loan production, continued fixed-rate asset repricing and disciplined liability management also aided growth.
The net interest margin (NIM) (on an FTE basis) increased to 3.36% from 3.12% in the year-ago quarter.
Non-interest income rose 41% year over year to $1.06 billion. The increase was primarily driven by higher wealth and asset management revenues, commercial payments revenues, consumer banking revenues, capital markets fees and commercial banking revenues, partly offset by a decline in mortgage banking net revenues.
Non-interest expenses surged 67% year over year to $2.11 billion. The increase was primarily due to a rise across all cost components and the inclusion of Comerica acquisition-related costs, including merger and integration expenses.
The efficiency ratio was 64.3%, higher than the year-ago quarter’s 56.2%. An increase in the ratio indicates a deterioration in profitability.
FITB’s Loans & Deposits Increase Sequentially
As of June 30, 2026, portfolio loans and leases rose 1% to $178.5 billion from the previous quarter. Total deposits increased marginally from the prior quarter to $234.1 billion.
FITB’s Credit Quality: Mixed Bag
The company reported a provision for credit losses of $129 million, down 25% from the year-ago quarter.
Total non-performing portfolio loans and leases were $1.04 billion, up from $853 million in the prior-year quarter. However, the non-performing loan ratio improved to 0.58% from 0.70% in the year-ago quarter.
Net charge-offs in the second quarter declined to $135 million or 0.30% of average loans and leases (on an annualized basis) from $139 million or 0.45% in the prior-year quarter.
The total allowance for credit losses rose 23% to $3.15 billion year over year. The allowance for credit losses represented 1.76% of portfolio loans and leases, down from 2.09% in the year-ago quarter.
Fifth Third’s Capital Position Weakens
The CET1 capital ratio was 9.93% compared with 10.58% in the year-ago quarter. The Tier 1 risk-based capital ratio was 10.81% compared with 11.85% in the prior-year quarter.
The leverage ratio declined to 9.20% from 9.42% in the year-ago quarter.
Fifth Third’s Q3 & 2026 Guidance
For the third quarter of 2026, Fifth Third expects average loans and leases to rise 1% sequentially.
NII is projected to increase 2% to 2.5% from the second-quarter baseline of $2.22 billion, while non-interest income is expected to rise 1% to 3% from the baseline of $1.04 billion.
Adjusted non-interest expenses are expected to decline 1% to 2% sequentially from the second-quarter baseline of $1.86 billion. The net charge-off ratio is projected to be between 30 and 35 basis points, while the effective tax rate is expected to be 22.5%.
For 2026, Fifth Third narrowed its average loans and leases outlook to $174-$176 billion from the prior expectation of the mid-$170 billion range.
The company slightly raised its 2026 NII outlook to $8.74-$8.80 billion from the previous guidance of $8.7-$8.8 billion, driven by the assumption of a higher 4% federal funds rate at year-end 2026 compared with 3.75% previously.
The company now expects non-interest income of $4.06-$4.16 billion, compared with its prior outlook of $4-$4.2 billion.
Adjusted non-interest expense is now expected to be $7.22-$7.26 billion, compared with the prior outlook of $7.2-$7.3 billion, while the net charge-off ratio is still expected to be 30-40 basis points and the effective tax rate 22-23%.
Our Viewpoint on Fifth Third
Strong growth in NII, driven by the full-quarter contribution from Comerica, organic loan production, fixed-rate asset repricing and disciplined liability management, supported top-line expansion. The company also witnessed solid growth in loans and deposits, reflecting improving business momentum.
Broad-based fee income growth and lower provisions were other positives. The decline in the net charge-off ratio also reflected strong credit performance. However, elevated expenses related to integration activities and the lower year-over-year capital ratios remain near-term concerns.
The Comerica acquisition (completed in February 2026) remains on track for integration, with systems conversion scheduled for Labor Day weekend. Fifth Third expects the conversion to unlock the full $850 million annualized expense synergy run rate in the fourth quarter of 2026.
Fifth Third Bancorp Price, Consensus and EPS Surprise
Fifth Third Bancorp price-consensus-eps-surprise-chart | Fifth Third Bancorp Quote
Currently, Fifth Third carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
M&T Bank Corporation MTB reported second-quarter 2026 net operating earnings per share of $5.35, which beat the Zacks Consensus Estimate of $4.66. The bottom line compared favorably with earnings of $4.28 per share in the year-ago quarter.
MTB’s results were aided by higher NII and a rise in non-interest income on a year-over-year basis, along with loan growth. However, higher expenses acted as headwinds.
The PNC Financial Services Group, Inc. PNC has delivered adjusted earnings per share of $4.85 in the second quarter of 2026, beating the Zacks Consensus Estimate of $4.51 and up from $3.85 a year ago.
Results reflected higher NII, strong fee income growth, an improvement in the NIM and solid loan growth. However, higher expenses and a decline in the deposit balance were headwinds for PNC.
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This article originally published on Zacks Investment Research (zacks.com).