Fifth Third Bancorp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Tim, can you give us some further updates or color on the Comerica transaction in terms of how it's been received internally at Comerica and maybe by their customers? They're going to be obviously part of Fifth Third in a short while. And then second, as part of that, how the process is going with the regulators? We're seeing an incredibly expedited timeline on deals that have been announced before your deal being approved in less than six months.

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Great. I appreciate that. And as a follow-up, as you said in your opening comments, the great banks distinguish themselves on how they navigate uncertain environments. And this week has certainly been very uncertain for many of the regional banks, including your own. Because of the concerns about this, NDFI lending and the contagion risk. And I frame that with, if you go back to the 1980s and look at what happened in the price of oil in Texas dropping below $10 a barrel that led to the contagion risk of commercial real estate blowing up. In the NDFI portfolio you have, and I know you have the Tricolor issue, but is there a contagion risk in there? And can you just share maybe your thoughts on what's going on with that portfolio and how the market is reacting to it?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : I guess maybe just sticking with credit and outside of the NDFI issues. Just if you -- from a mark-to-market standpoint, are your customers feeling the pain on the commercial side from tariffs and slowing activity? Or are we on the other side actually where things are picking up in terms of folks wanting to make investment decisions, which could drive loan growth? I'm just wondering what seems more likely as we cut through all this noise at the moment here?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's helpful. And I guess just a separate question. I think, back to Comerica. I think if you don't mind spending some time around -- and you talked about this when you announced the deal, just the optionality that Comerica provides. So you've talked about opening the branches in Texas, but Comerica also had a big technology, life science practice and Fifth Third through Newline has been leaning in there. Just either it's that or either it's double-clicking on the existing footprint and deepening relationships, which may have kind of sidelined a bit over the last decade. What's that potential to unlock and accelerate growth for the combined entity as we look out a year from now?

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : Tim, so I mean, based on all you've said, I don't get the impression that there's any change or impact to your de novo expansion plans while you go through the Comerica transaction. But I was just hoping you could spend a moment discussing sort of how you balance the planned organic expansion with the large integration, just to make sure nothing sort of slips through the cracks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 1:00PM, FITB.OQ - Q3 2025 Fifth Third Bancorp Earnings Call

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : Okay. Perfect. And then with regard to Direct Express, you noted that the merger should simplify the transition for the customers. I imagine it really eases things for you all as well. I know there was already a sense of urgency to get the balances moved before the merger was announced. But I was hoping you could just sort of spend a moment, at least at a top level on how -- I presume it's all still going to switch to Fifth Third's rails. How -- what are the sort of the plans for that to take place?

Question: Manan Gosalia - Morgan Stanley & Co Ltd - Analyst : You touched on Direct Express right now. I was wondering if you could talk about just opportunity there on the income statement and the contribution there. I think on the CMA deck, you adjusted for about $110 million in NII. But can you touch on what the full opportunity is there? And how do you expect that to grow, the fee contribution that you expect maybe the expense add on there? Any additional color there would be helpful.

Question: Manan Gosalia - Morgan Stanley & Co Ltd - Analyst : That's very helpful. Maybe if I can pivot over to credit. Excluding the credit that you called out, I think NCOs were about 52 basis points this quarter, and you're guiding for about 40 basis points in the fourth quarter. I know you talked about some of the sentiment and what you're hearing, but can you speak to what gives you the confidence that NCOs will step down from here? And how we should think about that going into 2026? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 1:00PM, FITB.OQ - Q3 2025 Fifth Third Bancorp Earnings Call

Question: Ken Usdin - Bernstein Autonomous LLP - Analyst : I was wondering if you can talk a little bit about the NII trajectory and the helpers that you have. Can you just give us an update about the fixed rate repricing that you have and what you're seeing now given the change in the curve in terms of the benefits and how long out you have line of sight on to that?

Question: Ken Usdin - Bernstein Autonomous LLP - Analyst : Yes. Great. And that was actually dovetail to my follow-up, which was just -- it's been great to see the non-interest-bearing growth over the last couple of quarters and still a little increase in the IBD costs. So to that point you just made, and given that we're on the next leg down of the rate cycle, what does that put us into context in terms of what you're expecting to see in terms of deposit betas on the IBD side?

Question: Sean Cohan - Keefe Bruyette & Woods Inc - Analyst : Sean Cohan, actually on for Chris McGratty. Question just on the expense growth expectations. You touched on near-term expense growth elevating as you continue to invest in the branch expansion. But just longer term, how should we think about operating leverage from here? And maybe more specifically, how you think about organic expense growth in terms of balancing places that require continued investment, such as payments as well as the branch expansion, obviously, in Texas as well as Southeast versus kind of like the synergies and the offsets from both the merger as well as prior AI expense? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 1:00PM, FITB.OQ - Q3 2025 Fifth Third Bancorp Earnings Call

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : I have kind of one negative question, one positive question. So the negative question, if you could just double click on the Tricolor category. So I think it was 9% of your total NDFI. Just elaborate more on what's contained in that category. And the positive question is you talked about the team that will be in charge of the integration of Comerica. You have Jamie. You also don't -- I haven't heard you talk about Darren Keeney either. I almost forget that he's there, you're keeping him like lock the deposit somewhere, but you have a lot of talent at the top of the house. I'd like to hear how they'll be deployed for the integration, but first, more elaboration on the Tricolor category. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 1:00PM, FITB.OQ - Q3 2025 Fifth Third Bancorp Earnings Call

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : And now that the dust has settled a little bit, one challenge that you think you're really going to have to gear up for that you -- it's more in your face and you may be underappreciated or are you just like, hey, this is -- we're going to have to do this right and one positive that you said, hey, this might be better than we thought. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 1:00PM, FITB.OQ - Q3 2025 Fifth Third Bancorp Earnings Call

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : So it sounds like some ex-frenemies will become colleagues that have worked together before.

Question: Peter Winter - D.A. Davidson & Co - Analyst : Just at Barclays, following the Tricolor announcement, you mentioned that you were going to take a step back, look at the processes to see if you could have done anything differently. And I'm just curious what you discovered and that you need to make any changes.

Question: Peter Winter - D.A. Davidson & Co - Analyst : Got it. And then just a quick follow-up. With the Comerica deal, you'll have roughly $290 billion in assets and become a Category III bank. Does that happen when the deal closes? Or is it kind of a fourth quarter average before you become Category III? And does that involve entail additional expenses and maybe risk management controls?

Question: Erika Najarian - UBS AG - Analyst : So just wanted to make sure that we're taking away the right message from a funding strategy perspective. Tim, it really struck me when you did the Comerica announcement conference call that you said that it was funding that was really preventing them from fully realizing their growth potential. And then Bryan noted a 30% deposit beta from here. As we think about the go forward, both from a stand-alone company and together, should we now think, okay, the priority has to be retaining the funding, and that's more of a priority growth in deposits and retention of deposits is a bigger priority over over-price. And by the way, that's okay because the power of the combined NII from both the bigger balance sheet and the purchase accounting will supersede sort of the lower reprice?

Question: Erika Najarian - UBS AG - Analyst : And my second question, and I realize we're moving -- you were closer to 10:15. This is for you, Tim, and maybe if Jamie is also in the room since he's head of integration. So clearly, the financial benefits are obvious. You talked very passionately about the cultural and strategic fit. We have seen in the past some of the larger deals that have been announced previously been hampered by sort of poor back-end execution, right, in terms of how they approached the tech integration. And we haven't talked much about that, Tim and Jamie. I'm just wondering if you could maybe give us a sense of your approach for the back end and tech integration and how you would prevent that in terms of prevent like slippage, in terms of expenses or delay in expense synergies and all of that, that has have hampered peers?

Question: Erika Najarian - UBS AG - Analyst : Perfect. And thank you Greg, for all o that color. It's never fun when you're popular, but I think investors appreciated the color.